Netflix is in need of another breakout hit. The streaming company has had trouble consistently creating successful original shows, which has put more pressure on its stock price during a tough 2026.
Netflix shares dropped almost 4% before trading started on Friday, bringing the total decline for the year to about 20% as of Thursday’s close.
The recent drop came after Wells Fargo downgraded Netflix, lowered its rating, and cut its price target, suggesting the stock could fall even more from here.
Investors grew more worried in July when Netflix announced it would release its main engagement report once a year instead of twice. This raised concerns that Netflix might be losing subscribers to other streaming services. Wells Fargo pointed out that engagement trends are troubling, noting that Netflix has not had any major original series lately and that this is starting to show in its results. The firm said Netflix needs new hit shows to boost its stock, and added that Disney seems to be doing a better job with its own hit-focused strategy.
Netflix has some options to tackle the problem. It could spend more on content, license more live sports, or try to grow through mergers and acquisitions. Last year, Netflix agreed to buy Warner Bros. Discovery, but lost out to a higher bid from Paramount Skydance.
Wells Fargo said that if Netflix tries any of these strategies, its investment outlook could become more complicated. The new price target suggests Netflix would trade at about 15 times its expected 2027 earnings, down from around 20 times as of Thursday.
