Netflix Stock Falls After Wells Fargo Downgrade: “Engagement Trends Look Worrying to Us”

On September 18, Netflix's stock fell 4.67% to $71.79 following a downgrade from Wells Fargo and a slashed price target. The analyst cited weaker engagement and concerns over Netflix's original content. Trading volume was 116% higher than the three-month average, with 87.2 million shares changing hands. The S&P 500 and Nasdaq Composite also saw modest gains of 0.17% and 0.39%, respectively.

Among streaming services, Disney and Comcast experienced similar declines. Wells Fargo's analyst Steven Cahall downgraded Netflix to "underweight" and reduced the target price from $80 to $57, suggesting a potential 20% further drop. This comes despite a counterproposal from Evercore ISI analyst Kutgun Maral, who suggested a $110 stock price target.

Netflix's next catalyst may be its earnings report on October 20, where management guidance could clarify which analyst view is correct. Stock Advisor analysts did not include Netflix in their top 10 picks for investment, noting that if investors had bought $1,000 worth at the time of their recommendation in December 2004, it would have grown to $406,141.