Netflix shares sank 4.1% in pre-market trading.
On the news front, Wells Fargo downgraded Netflix from Equalweight to Underperform and slashed its target price from $80 to $57, making it one of the most bearish calls on the Street. The new target stands well below the consensus mean price target of approximately $94.02, according to analysts polled by FactSet. This marks a significant divergence from other sell-side views, including Evercore ISI, which just days earlier raised its Netflix target to $110 from $100 while maintaining an Outperform rating.
Wells Fargo analyst Steven Cahall and team said Netflix viewership was down 8% year over year in the first half of 2026, while hours viewed for its Top 100 Originals fell 3%. It also expects a “>20% y/y drop in Top 100 NFLX Originals” in the second half.
The analysts said Netflix appears to be broadening engagement by taking content more directly to YouTube while highlighting gaming, documentaries, and sports. But they said the company faces a content mix shift and risks “missing the water cooler originals.”
The firm expects Netflix’s second-half 2026 content slate to weigh on margins, with 27/28 operating margins forecast at 32.6%/34.2%, below prior expectations.
Wells Fargo also pointed to tougher content choices ahead, saying Netflix faces options including a “content spend reboot” and a “messier NFLX story.” It said the stock could be harder to forecast and that its earnings estimate was still a touch below consensus.
Adding to sentiment pressure, recent insider transaction filings revealed that director Reed Hastings planned to sell approximately 311,300 shares valued at around $25.2 million through Merrill Lynch, while director Barton Richard N conducted multiple consecutive sell transactions in September. The combination of a major bank downgrade and sustained insider selling weighed on pre-market sentiment.
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