Key Takeaways
- Shares of Netflix declined 1% on September 23, capping an 11% monthly slide and extending year-to-date losses to 23%.
- HSBC downgraded Netflix from Buy to Hold, reducing its price target from $96 down to $76 due to YouTube’s expanding market presence.
- YouTube reached an unprecedented 14.2% of U.S. television viewing time in July, while Netflix’s share declined to 7.8%.
- Wells Fargo joined the downgrades, forecasting a 21% year-over-year decline in viewing hours for Netflix’s top 100 original series.
- Netflix is pivoting toward live sports programming and advertising revenue, with 2026 U.S. upfront ad commitments nearly doubling year-over-year.
Netflix shares ended trading down 1% on September 23, settling at $71.36. The decline extends a challenging month for the streaming giant, with shares retreating 11% throughout September and 23% year-to-date.
By comparison, the S&P 500 has climbed 13% during the same timeframe, highlighting Netflix’s underperformance.
The selloff reflects mounting concerns among investors. Data suggests audiences are increasingly gravitating toward YouTube while time spent on Netflix diminishes.
HSBC formalized these concerns on September 22, downgrading Netflix from Buy to Hold while slashing its price target from $96 to $76.
Analyst Mohammed Khallouf emphasized YouTube’s accelerating presence on television screens. The platform captured an all-time high of 14.2% of total U.S. TV viewing minutes in July, climbing 80 basis points versus the prior year.
Netflix’s share, conversely, fell to 7.8%āa multi-year low representing a 100-basis-point year-over-year decline. Khallouf attributed the drop to weakening audience response to Netflix’s original programming.
Understanding YouTube’s Competitive Edge
YouTube has been investing heavily in direct payments to prominent creators for exclusive content. The platform also introduced a “Shows” feature this summer that replicates the episodic format traditionally associated with streaming services like Netflix.
This evolution narrows the distinction between user-generated video platforms and conventional streaming. It simultaneously increases the financial burden on Netflix to maintain a compelling content portfolio.
Wells Fargo reinforced similar concerns with its recent downgrade. The firm’s analysts project a 21% year-over-year decrease in viewing hours across Netflix’s top 100 original titles.
HSBC’s research corroborates these findings. English-language Top 10 content viewing hours fell approximately 17% year-over-year during July and August.
Netflix’s second-quarter financial results compounded investor anxiety. Revenue fell short of expectations, third-quarter guidance disappointed, and total viewing hours increased just 2% during the year’s first half.
Netflix’s Strategic Response
Facing these headwinds, Netflix is doubling down on two areas: advertising and live sports programming. The company reports its U.S. upfront advertising commitments for 2026 have nearly doubled compared to the previous year.
The streaming service has also enhanced its advertising infrastructure, rolling out automated ad purchasing capabilities and improved audience segmentation tools. Live sports content remains central to this strategy.
Netflix secured the NFL’s inaugural regular-season game in Australia for its 2026 lineup. Additional programming includes a Thanksgiving Eve matchup and several holiday-themed games.
These live events could attract casual viewers who typically bypass Netflix’s standard programming. They also provide advertisers access to large, simultaneous audiencesāa rarity in on-demand streaming.
The stock’s valuation has compressed significantly. Netflix currently trades at approximately 21 times forward earnings, down from roughly 31 times at the close of 2025.
However, HSBC increased its content expenditure projections for Netflix in 2027 and 2028 while simultaneously reducing earnings-per-share estimates for those years. Higher spending without corresponding engagement growth could sustain downward pressure on shares.
Despite recent downgrades, the broader analyst community maintains a bullish stance. Netflix carries a Strong Buy consensus rating based on 25 Buy recommendations, seven Hold ratings, and one Sell rating issued over the past three months. The average analyst price target stands at $94.34, suggesting 32% potential upside from current trading levels.
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