TLDR
- Netflix stock dropped 1% on Wednesday, trading as low as $69.51 before settling at $69.58.
- The stock sits below both its 50-day ($75.79) and 200-day ($82.73) moving averages.
- Analysts are split: Deutsche Bank and Evercore ISI raised targets, while HSBC and Wells Fargo downgraded the stock.
- Co-CEO Ted Sarandos admitted growth is slower than he wants, though he says the business is “growing fine.”
- Third-quarter earnings will be the next big test, with investors watching subscriber numbers, pricing, and ad revenue.
Netflix (NFLX) stock fell 1% during Wednesday trading, dipping to $69.51 before closing the session at $69.58. Trading volume came in at roughly 34.5 million shares, well below the average of 42.6 million.
The drop pushes Netflix further under its key technical levels. Its 50-day moving average sits at $75.79, and its 200-day average is $82.73, meaning the stock remains well off its recent highs.
Despite the slide, Wall Street opinion on Netflix is far from united. Deutsche Bank upgraded the stock to Buy from Hold this week, pointing to international engagement growth and the company’s use of AI in production and advertising.
Evercore ISI also raised its price target to $110, keeping an Outperform rating. The firm highlighted stronger market penetration in the U.S. and Japan, plus upcoming live programming like Netflix’s exclusive Japanese WWE rights starting October 1.
Analysts Pull in Different Directions
Not everyone is convinced. HSBC downgraded Netflix to Hold, citing competition from YouTube and a still-small advertising contribution to overall revenue.
Wells Fargo went further, cutting its rating to Underweight with a $57 price target. The firm pointed to concerns that Netflix’s growth is maturing faster than new revenue streams can replace it.
The result is a consensus rating of Moderate Buy, with an average price target of $95.15. That is a wide gap from where the stock trades today.
Rising content spending adds another wrinkle. Netflix continues to commit heavily to new productions, and that upfront spending could squeeze free cash flow even as revenue keeps climbing.
On the earnings side, Netflix beat expectations in its last report. The company posted $0.80 in earnings per share against a $0.79 estimate, with revenue of $12.56 billion, up 13.4% year over year.
Sarandos Addresses Growth Concerns
Co-CEO Ted Sarandos spoke directly to the slowdown at the Bloomberg Screentime conference this week. “Overall, we’re not growing as fast as I want us to, and we’re working on making that move faster,” he said.
Sarandos pointed to live programming as part of the strategy. Live content makes up about 5% of Netflix’s $20 billion annual content budget but drives a disproportionate number of new signups.
He also walked back his comment slightly, adding that “the business is great and growing fine.” When asked about Netflix’s past pursuit of Warner Bros. Discovery, Sarandos simply replied, “Nahhh.”
On the subject of streaming market share following the Warner Bros. Discovery and Paramount Skydance consolidation, Sarandos said it’s too early to know how things will shake out. “It looks on paper, so far it’s one and one,” he said.
Insider activity has also drawn attention. CFO Spencer Neumann sold over 9,000 shares in August, while insiders overall have sold more than 179,000 shares worth over $13 million in the past ninety days.
Institutional investors still hold the majority of the stock, with ownership at roughly 81%. Several firms added to their positions during the first quarter, even as the share price has slipped since.
Looking ahead, third-quarter earnings will be the next real catalyst. Investors will be watching subscriber trends, ad revenue growth, and management’s commentary on cash flow heading into the new year.
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