Netflix’s is in a nosedive, and the culprit is engagement, one bank says.
The streaming giant, which has more global subscribers than any competing platform, risks falling further as viewers watched 8 percent fewer hours of its shows, movies, and live events in the first six months of the year than in 2023, Wells Fargo analyst Steven Cashall told Yahoo Finance in late September. That could have a big impact on the company’s bottom line, and future, as it pushes for more advertising. Ads during shows are dependent on people watching the programming - more so than just total number of subscribers.
“Engagement trends look worrying to us,” he said.
Netflix’s stock is down around 32 percent since January 1 and may reach its lowest year-ending stock price since 2023.
Wells Fargo’s negative outlook for Netflix’s stock price is partly tied to the company’s ad revenue, which takes a hit when viewing hours go down.
Netflix viewers were watching 1.81 hours of content a day in June 2023. Over the past three years, that number has fallen to 1.64 hours, according to Wells Fargo data cited by The Wall Street Journal.
The streaming platform launched its “Basic With Ads” tier in October 2022 for $6.99 a month - it was the first time the company offered a subscription tier with ads. Netflix runs ads on live events such as boxing matches and NFL games regardless of viewers' membership status.
While Netflix’s hit scifi show Stranger Things captured the most viewing hours through the first six months of the year, the entertainment giant only had one other exclusive show in the top 20 - period drama Bridgerton, according to audience analytics firm Nielsen.
And, Netflix’s attempt to buy entertainment platform Warner Bros. Discovery fell through in February after announcing the acquisition three months earlier.
The Independent contacted Netflix for comment.
Cahall predicts that viewership hours will decline further, leading to lost ad revenue. Netflix’s stock price will drop another 21 percent before the year is out, he estimated.
Not all analysts believe Netflix is in for a bad year, though. The company bought back nearly 70 million shares from July through September, which is a sign that the company is betting on its future success, Motley Fool stock analyst Neil Patel said in an analysis Thursday.
“The overarching takeaway is that executives must believe the stock is cheap. If they didn't think this was the case, they would've repurchased far fewer shares or paid down debt, for instance,” Patel said.
Netflix’s market dominance is also an indicator that the company will pull out of its share-price nosedive, he said.
“With over 325 million subscribers (data from year-end 2025) and expected 2026 revenue of $51.1 billion, it operates with tremendous scale,” Patel wrote.
“That supports brand power. And it allows the business to spread its rising content costs across a huge user base.”
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