Netflix falls 8.7% after Wells Fargo cuts rating

Netflix shares dropped 8.7% after Wells Fargo downgraded the streaming company. The bank cited softening viewer engagement and rising competition from rivals such as YouTube as primary concerns for subscriber viewing time.

The downgrade highlights potential hurdles for the growth of Netflix's ad-supported tier, which relies on subscriber time spent on the platform. In response to engagement pressures, Netflix has explored new content formats, including video podcasts, short-form "Verts", and an expanded NFL live sports push distributed through EverPass and DIRECTV FOR BUSINESS.

Prior to the downgrade, optimistic analyst projections had modeled Netflix earnings reaching roughly US$21.8 billion by 2029 with expanded margins. However, weaker engagement trends combined with heavy content spending could lead analysts to revise both bullish and conservative forecasts.