Wells Fargo Just Downgraded Netflix Stock. Here's Why.

Netflix (NFLX) shares are on track to record their worst year since 2022, but a senior Wells Fargo analyst, Steven Cahall, cautions against hoping for a swift recovery. In his latest research note, Cahall downgraded the streaming giant to “Underweight” and slashed his price target to $57, indicating potential downside of another 20% from here. 

At the time of writing, Netflix stock is already trading about 35% below its year-to-date high. 

Wells Fargo’s Bearish View on Netflix Stock

Steven Cahall cited a troubling slowdown in platform usage for his bearish view on NFLX shares. 

During the first half of this year, subscribers watched on average 1.6 fewer hours per day, which translates to about an 8% decline in overall viewership compared to the same period in 2023. 

Crucially, heavy hitters are driving core customer retention, with Wells Fargo’s data indicating that roughly 20% of total hours viewed come from the Top 100 titles. 

With expectations of an even steeper decline in hours viewed for Top 100 originals during the back half of 2026, Cahall cautioned that “if the opportunity is to recast Netflix Inc into a broader content hub, the risk is missing the watercooler originals."

What Else Could Hurt NFLX Shares in 2026

To counter the softening engagement trends, Netflix has widened its ecosystem by pushing content to platforms like YouTube while expanding into video games, documentaries, and live sports. 

However, the Wells Fargo analyst warns this strategy risks diluting the core premium formula that has historically powered subscriber loyalty. 

Pushing non-exclusive content further out makes it harder to justify steady price hikes and creates subscriber churn risk into next year, he told clients. 

Although Cahall conceded that “breakout hits are a must for Netflix shares to work again” and acknowledged the firm’s proven track record of producing unexpected hits, he stressed that without blockbuster releases, the streaming stock faces a tough setup heading into Q3 earnings. 

Netflix Remains Buy-Rated Among Wall Street Firms

Other Wall Street analysts, however, do not agree with Cahall’s bearish call on NFLX stock. 

The consensus rating on Netflix remains at “Moderate Buy,” with the mean price target of about $96 indicating potential upside of about 35% from here. 

On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.