Analyst Downgrades Netflix Stock Amid Concerns

Shares of Netflix (NFLX) received a downgrade from Wolfe Research's Peter Supino, who believes that the company's growth forecasts for the next few years are risky. Supino is concerned about the slower-than-expected adoption of Netflix's advertising-supported tier of service as well as signs of members downgrading to lower-priced plans. This downgrade comes as the stock fell 1.1% in morning trading on Friday.

Potential Headwinds for Netflix

Caution Surrounding Operating Leverage

Another concern raised by Supino is the company's operating leverage. He notes Chief Financial Officer Spencer Neumann's comments, suggesting that it may be challenging for Netflix to maintain a three-percentage-point increase in margins annually. This caution stems from the anticipation of slower top-line growth compared to historical trends, indicating potential challenges ahead.

Earnings Report and Price Hike Plans

Investors eagerly await Netflix's third-quarter earnings report, set to be released after Wednesday's closing bell. The company's price hike plans may face untimely challenges amid a weakening economy and stock market, according to some analysts.

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