Pivotal Research Group is moving away from Netflix for the time being. Analyst Jeffrey Wlodarczak downgraded the streaming stock to a hold rating from buy. He also lowered his target price to $105 per share from $160, which implies a gain of just 5%. Wlodarczak cited Netflix’s $72 billion deal to buy Warner Bros. Discovery’s film studio and streaming services as the reason for his downgrade. Headwinds it introduces, he said, include approval risk and a likely time frame of between 18 to 24 months to close, along with the possibility of a bidding war with Paramount Skydance that could further drive the cost higher. NFLX YTD mountain NFLX YTD chart Most importantly, he added, this deal underscores Netflix’s concern that short form entertainment and declining attention spans are stealing market shares away from traditional long form content and streaming. “We are moving to more conservative stance on our outlook as we believe this expensive deal does partly signal concern from management about trying to combat mediocre subscriber engagement trends,” Wlodarczak wrote. “We reduced our 2030 subscriber forecasts from ~440M to ~420M and our ’30 [average revenue per user] from $15 in 2030 to $13 which was the primary driver of a substantial $55 decline in our YE’26 target price to $105.” Other upcoming risks for the stock include Netflix’s large future content obligations, its high reliance on net neutrality and materials risks that will be introduced by the development and launch of an advertising-based option. Wlodarczak added that user engagement trends have been flatlining despite a strong content slate, while Netflix’s dependency on Amazon Web Services to host its content infrastructure also benefits a direct competitor. Netflix stock has added 12% this year.
Netflix gets a downgrade after announcing Warner Bros. film and streaming acquisition
