Netflix shares skidded 4% Wednesday after mixed-to-uninspiring quarterly earnings as Wall Streeters cut price targets on the stock.
Analysts want proof of more muscular viewer engagement. They generally agree with the streamer’s co-CEOs that the key is culturally resonant, English-language series and movies that are home runs versus “the really solid doubles and triples this year,” as noted by co-CEO Ted Sarandos on an earnings call Tuesday. The biggest U.S. hits often scale globally, creating a tailwind for the platform.
The quarterly results “did little to change the narrative,” Jessica Reif Ehrlich of BofA Securities, wrote in a client note. Calling Netflix a “battleground stock” due to debate over its path, she reiterated her “buy” rating but dropped her 12-month price outlook to $90 from $105. Nevertheless, she concluded, “While overhangs are likely to persist near term, Netflix has repeatedly demonstrated an ability to adapt, execute against shifting industry dynamics and compound shareholder value over time.”
Netflix’s slate for this fall and into next year looks far more promising than recent chatter and executive turnover would suggest, many analysts contend.
“One breakout hit could shift sentiment to the positive,” says Morgan Stanley analyst Sean Diffley in a note to clients. “We think U.S. content slate fears are overblown,” agreed TD Cowen’s John Blackledge.
Netflix’s results for the July-to-September quarter saw revenue in line, a beat on earnings, and slower advertising trickling into the current fourth quarter due to timing of ad product launches and integrations. But those “delays should be months, not years,” says Diffley.
More broadly, Alicia Reese of Wedbush Securities likes that “Netflix isn’t beholden to industry headwinds; it is in control,” she says. “Churn and pricing held up.”
She went on to note that Netflix “is expanding its valuable live-events inventory, and it plans to preserve its content strategy rather than duking it out with YouTube on short-form. Importantly, management’s tone underscored its intent to shift toward a platform model as it broadens its licensing partnerships and add-on deals, in addition to reaccelerating its ad rollout.”
Netflix stock has drifted down toward a two-year low at around $65. That’s down by 25% year to date and over 40% in the past 52 weeks.
Why exactly is a compound problem.
First, Warner Bros. Netflix’s bid for the asset had investors questioning whether the streamer itself was questioning what would drive its next phase of growth as competition intensified. When Netflix lost Warner to Paramount, some got more scared – although mostly lingeringly in hindsight. At that moment, many investors were relieved to avoid a costly bidding war and liked the hefty breakup fee.
Netflix’s share of U.S. streaming time declined to some 16% in July 2026 from about 22% in July 2023 (per Nielsen). Its 16 Emmy wins last month also marked its weakest haul since 2016.
With the slate under a microscope, enter new Chief Content Officer Peter Rice. His arrival (after the surprise ouster of 10-year company veteran Bela Bajaria) was Netflix signaling decisive action, multiple analysts said. They seem to accept the company’s line that Rice is the right person at the exact right moment – which will only add to the pressure on the former Fox and Disney executive.
The new chief content officer “is a clear catalyst for change, and Peter Rice brings deep relationships with the creative community and a wealth of industry experience, having run TV networks, movie studios and streaming services. Importantly, he has demonstrated an ability to bridge creative ambitions with financial goals,” says Morgan Stanley’s Diffley.
Adds Citizens’ Condon, “We see meaningful opportunity for … Rice to leverage his deep industry relationships to attract leading creative talent, improve execution in prestige television and film, and potentially pursue a more ambitious live sports strategy.”
As for Netflix shares, there’s no way of knowing if or when they’ll ever recapture their former glory days repped most recently by a 52-week high near $117.
Condon thinks the shares are priced fairly where they are as the company searches for its next leg of growth and has a “market perform” (hold) rating on the stock.
TD Cowen’s Blackledge has a “buy” on the stock and $100 price target on a potential upswing in business.
Reese from Wedbush is at an “outperform” but cut her stock price target to $8o because the speed of a revival isn’t clear.
Diffley from Morgan Stanley has an “overweight” rating and a $77 target, citing room to improve.
Dade Hayes contributed to this report.