Netflix Stock Falls in September as Analysts Point to YouTube Competition and Weak Engagement

Netflix shares have declined sharply in September 2026, with the stock falling to a two-month low of $70.11 on September 18 and closing at $72.16 on September 22. The drop followed a series of Wall Street downgrades that cited weakening viewer engagement and growing competition from YouTube.

The sell-off marked a fourth consecutive session of losses for the streaming company. Netflix stock has now fallen roughly 23 percent year to date and more than 48 percent from its record high of $134 in June 2025.

Wells Fargo analyst Steven Cahall issued the first bearish rating in months on September 18, downgrading Netflix to Underweight from Equal Weight and cutting his price target to $57 from $80.

Cahall stated in his research note that engagement trends look worrying. He wrote that Netflix has lacked big original series and it is showing. He also said breakout hits are a must for the stock to work again.

The analyst estimated that viewing hours per subscriber could fall about 4 percent year over year in the second half of 2026. He projected that viewing of Netflix’s Top 100 originals would decline more than 20 percent year over year during the same period.

Cahall said viewing was 1.6 hours per subscriber per day in the first half of 2026, down about 8 percent from the first half of 2023 after adjusting for password sharing and geographic mix.

HSBC Downgrade Cites YouTube

HSBC analyst Mohammed Khallouf issued a second downgrade on September 22, cutting Netflix to Hold from Buy and reducing his price target to $76 from $96. The new target represents a 21 percent reduction.

Khallouf wrote that YouTube has been benefiting from a declining reception to Netflix’s original content and that near-term recovery in engagement looks unlikely.

He noted that YouTube captured a record 14.2 percent share of United States television time in July, while Netflix’s share fell to a multi-year low of 7.8 percent. He stated that this momentum is increasingly coming at the direct expense of Netflix.

HSBC also found that viewing hours for English-language shows on Netflix’s weekly Top 10 lists fell about 17 percent year over year in July and August. The bank raised its 2027 and 2028 content-spend estimates by about 2 percent and cut its earnings per share estimates for those years by 6 to 9 percent.

Khallouf said YouTube is expected to spend about $23 billion on creator payouts in 2026, compared with Netflix’s roughly $20 billion in cash content spending.

Content Pipeline Concerns

Netflix’s Emmy wins in September were the lowest since 2016, according to HSBC. The Rotten Tomatoes audience score for the platform’s latest slate of franchise releases was down 7 percent versus the respective prior seasons.

Netflix reported second-quarter 2026 revenue of $12.56 billion, up 13.4 percent year over year, slightly below analyst estimates of $12.59 billion. Net income rose to $3.40 billion, or 80 cents per share, from $3.13 billion, or 72 cents per share, in the prior-year quarter.

The company guided third-quarter revenue to $12.86 billion, implying growth of 11.7 percent. That would mark a fourth consecutive quarter of decelerating revenue growth.

Netflix narrowed its full-year 2026 revenue guidance to $51 billion to $51.4 billion, compared with its earlier forecast of $50.7 billion to $51.7 billion.

Engagement Disclosure Change

In July, Netflix announced it would reduce the frequency of its engagement report from twice a year to once a year starting in January 2027. The company said the change would allow it to focus on key financial metrics of revenue and operating profit.

The decision drew scrutiny from analysts. Jefferies noted that the shift differs from Netflix’s 2024 decision to stop reporting subscriber additions, which came from a position of strength. This time, the firm said, the change arrives while engagement remains an active debate and a key overhang on the stock.

Netflix said viewing hours grew about 2 percent in the first half of 2026, an improvement from 1.4 percent growth in the second half of 2025. The company reported more than 97 billion hours of viewing between January and June.

Competitive Landscape

YouTube has been expanding its living room presence and revamping its layout to support Netflix-style episodic structures. The platform has also been offering multi-million dollar direct financing and higher payout structures to top creators in exchange for exclusivity.

Netflix has responded by pursuing video podcasts and offering deals to popular YouTube creators to publish on its platform. YouTube star Ms. Rachel made her Netflix debut in January 2025 with four curated compilation episodes. The episodes became Netflix’s seventh most-watched show and the single most-watched season of any children’s series in the first half of 2025, pulling in 53.4 million views.

YouTube’s advertising revenue reached $11.06 billion in the quarter, up 13 percent year over year and surpassing Wall Street expectations of $10.8 billion.

Mixed Analyst Views

Not all analysts share the bearish outlook. Bill Ackman’s Pershing Square initiated a new position in Netflix during the second quarter, valued at over $934 million at the end of the period.

In Pershing’s interim report, Ackman and Chief Investment Officer Ryan Israel wrote that time reallocated toward short-form video is far more likely to come from share donors like linear TV or lower-quality streaming services than from a utility-like service such as Netflix.

Regarding artificial intelligence, they wrote that people underestimate how expensive it is to create long-form, high-quality video, which remains among the most compute-intensive AI tasks.

BMO Capital Markets set a price target of $135, implying nearly 100 percent upside. The consensus price target among 32 analysts covering the stock stands at $94.34, implying 29 percent upside from current levels. Among those analysts, 25 have Buy ratings, six have Hold ratings, and one has a Sell rating.

Netflix is scheduled to report third-quarter 2026 earnings on October 20. The company projects revenue of $12.86 billion and an operating margin of 33.2 percent for the period.

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