Cahill, who covers the entertainment sector for Wells Fargo, said the company is facing a "dearth of hit series" and that viewership for its top 100 original titles could fall by more than 20%, a trend he described as "worrying" for the business.
The analyst’s downgrade came as Netflix’s stock closed at $71.79, down $3.52, with a market capitalization of roughly $314 billion. The move pushed the shares into a daily range of $70.11 to $72.38.
Cahill warned that without a pipeline of popular new shows, Netflix may struggle to grow subscriber numbers and total watch hours, metrics that are becoming increasingly important as the company expands its advertising revenue.
He noted that any attempt to reverse the trend—whether by spending more on original content or by acquiring sports rights—would raise content costs and could erode the streaming firm’s gross margin, which currently sits at about 49.5%.
Investors will be watching the company’s upcoming content slate and any strategic shifts closely, as the analyst’s outlook suggests that a prolonged slump in engagement could pressure the stock well below its current level.