Netflix analysts are souring on the stock as growth fears mount

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Photo by CHRIS DELMAS/AFP via Getty ImagesNetflix Inc.’s bullish support on Wall Street is starting to crack with the stock on pace for its worst year since 2022 amid rising concerns about growth.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountHSBC cut its rating on the streaming giant to hold last week, citing signs of weakening subscriber engagement. That followed a downgrade from Wells Fargo earlier this month that called out a lack of hit shows and gave Netflix its first sell-equivalent rating in months.This advertisement has not loaded yet, but your article continues below.An August rebound in the stock has been snuffed out, leaving Netflix down 24 per cent on the year and among the 50 worst performers in the S&P 500 index in 2026. Of the 65 analysts covering the shares, 49 now have buy ratings, the fewest since April, according to data compiled by Bloomberg.Canada's best source for investing news, analysis and insight.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Investor will soon be in your inbox.We encountered an issue signing you up. Please try again“Netflix has become a show-me story because it is missing the mark on having real blockbuster, top-100-type shows, which is something that needs to be fixed lickety-split,” said Eric Clark, chief investment officer at Accuvest Global Advisors, which owns the stock but has been reducing its position.Netflix has more subscribers than any other paid streaming service, but keeping viewers glued to their screens is increasingly important, especially as the company builds out its advertising business amid increased competition. Delivering a steady stream of hits is crucial to engagement, which is why the perception that Netflix has lacked breakout titles this year has weighed so heavily on shares.The stock is now down 47 per cent from a peak in June 2025.Even well-received Netflix shows have struggled to maintain their audiences past their first seasons, Bloomberg News reported in July. The company’s attempt to buy Warner Bros Discovery Inc., which it abandoned earlier this year, was seen by some investors as a lack of confidence in its ability to grow organically.This advertisement has not loaded yet, but your article continues below.A Netflix spokesperson declined to comment.The dearth of Netflix blockbusters stands in contrast with smaller streaming services such as Apple Inc.’s, which dominated this year’s Emmy Awards, or to the resurgence of theatrical moviegoing, fuelled by big hits such as The Odyssey. Theater companies AMC Entertainment Holdings Inc., Cinemark Holdings Inc. and IMAX Corp. have seen their shares rally more than 50 per cent this year, far outperforming the S&P 500 and Nasdaq 100’s gains of 12 per cent and 20 per cent, respectively.However, Netflix’s biggest rival for viewers is Alphabet Inc.’s YouTube, whose share of the United States TV market reached an all-time high of 14.2 per cent in July, according to Bloomberg Intelligence, which used the most recent monthly data from Nielsen. Netflix’s share dropped below eight per cent.YouTube’s gains are “increasingly coming at the direct expense of Netflix,” HSBC analyst Mohammed Khallouf wrote in his Sept. 22 downgrade.Of course, Netflix has a long track record of popular titles and it has some high-profile releases on the horizon, such as The Further Mis-Adventures of Cliff Booth, a sequel to Once Upon a Time… in Hollywood starring Brad Pitt.This advertisement has not loaded yet.This advertisement has not loaded yet, but your article continues below.Worries about Netflix’s engagement are overblown as all programmers experience cyclicality, Deutsche Bank analyst Bryan Kraft wrote in a note raising his rating on the stock to buy from hold on Tuesday.Netflix has “an established competitive advantage” in international production, and “the brand strength, global scale in subscribers/revenue, and organizational expertise to continue to broaden its position as a platform,” Kraft said.The next read on Netflix’s financial performance will come on Oct. 20 when the Los Gatos, Calif.-based company reports third-quarter earnings.Wall Street is anticipating revenue growth of nearly 12 per cent in the quarter, which would be the slowest expansion since 2023, according to data compiled by Bloomberg. Net income is expected to rise 36 per cent, up from growth of eight per cent a year ago.At roughly 19 times estimated earnings, Netflix shares are trading at a more than 60 per cent discount to their 10-year average of almost 50 times.—With assistance from Carmen Reinicke and Henry Ren.We apologize, but this video has failed to load.This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.