Netflix shares have plunged by more than 70% so far in 2022
Getty Images
A once infatuated Wall Street has definitely cooled on the godfather of streaming, Netflix , with a longtime bear admitting a January upgrade to Neutral was a mistake.
Benchmark analyst Matthew Harrigan cut his rating on Netflix to Sell from Hold, saying that he had “prematurely” upgraded the stock to Hold following the company’s fourth-quarter earnings report, and installed a new $157 price target.
Netflix (ticker: NFLX) shares, which have plunged by more than 70% so far in 2022, were down 1.84% ahead of the market open on Tuesday.
Harrigan was one of the few analysts to have a Sell rating on Netflix as it went up, and then as it came down. He upgraded the stock to Hold in January.
Harrigan said he was “not disconcerted” by Monday’s announcement that Netflix had hired former Electronic Arts (EA) executive Ken Barker as principal accounting officer, reporting to CFO Spencer Neumann. However, the market is now “very jaded” on streaming valuations and the stock could be pressured if member growth and operating profit margin “stall out in tandem.”
“Beyond the inflation challenged and more price sensitive consumer, the continued negative Netflix press glut, relating to member losses and even Prince Harry and Meghan, is a mild growth albatross,” Harrigan argued.
The Benchmark analyst isn’t alone as Wall Street waits to see how Netflix copes after it posted the first quarterly subscriber loss in more than a decade in April. Last week, Goldman Sachs analysts also downgraded Netflix stock citing concerns about slower consumer spending and heightened levels of competition from Amazon (AMZN) and Walt Disney Co (DIS).
Write to Lina Saigol at [email protected]
