Wells Fargo Cuts Netflix to Underweight With $57 Target as Engagement Collapses, Stock Falls 4.8%

Wells Fargo downgraded Netflix to Underweight from Equal Weight on Friday and slashed its price target to $57 from $80, making it the only analyst on Wall Street with a sell-equivalent rating on the streaming giant. Shares fell 4.8% to $71.72, extending a decline that has left the stock down roughly 20% for the year and on pace for its worst annual performance since 2022.

The bank cited sharply deteriorating viewer engagement as the central concern. Wells Fargo analysts expect viewing hours per subscriber to fall 4% year over year in the second half of 2026, with hours from Netflix's Top 100 Originals down 21% year over year. The firm concluded that "NFLX has lacked big original series and it is showing," adding that breakout hits are now a prerequisite for the stock to recover. The analysts also flagged a diversification into podcasts as a distraction from the core content problem.

Wells Fargo lowered its valuation multiple to 15 times forward earnings from 21 times, reflecting what it described as heightened churn risk and slower margin expansion. The firm now models 2027 and 2028 operating margins at 32.6% and 34.2%, respectively, with earnings per share of $3.77 and $4.52. The January 2027 Viewership Report is identified as the next major negative catalyst for the shares.

Despite the pressure, Netflix retains its lead in U.S. streaming, with 59% of respondents in a recent survey saying they watched the platform in the past year, ahead of Prime Video at 49%, Hulu at 43%, and Disney+ at 37%. Billionaire investor Bill Ackman, who initiated a position in Netflix, is sitting on a loss of roughly 21% this year as the Wells Fargo call adds further weight to an already difficult stretch for the stock.