Netflix closed the trading day at $71.79, down 4.67%, after the downgrade was reported. The stock’s trading volume spiked to 87.2 million shares, roughly 116% above its three‑month average of 40.4 million shares.
Wells Fargo cited weaker subscriber engagement and concerns that Netflix has not recently delivered highly popular original content. The analyst also warned that rising spending on live‑content could pressure the company’s gross margin, which currently sits at 49.53%.
The downgrade comes amid a broader softening in the streaming sector, with peers Walt Disney (DIS) and Comcast (CMCSA) also posting declines on the day. The S&P 500 and Nasdaq Composite both finished higher, up 0.17% and 0.39% respectively.
Despite the negative outlook from Wells Fargo, another analyst at Evercore ISI maintained a bullish view, assigning a $110 price target to Netflix, highlighting the company’s strong international penetration.
Netflix, which went public in 2002, has grown more than 59,000% since its IPO and now carries a market capitalization of roughly $314 billion based on publicly traded shares.