Shares of Netflix (NFLX) have declined 10% in the last two trading sessions and turned negative on the year as a selloff in the streaming giant accelerates.
The sharp decline in NFLX stock comes amid mounting volatility in U.S. equity markets and amid a steep selloff in technology stocks. The Nasdaq Composite index has officially entered a correction, defined as a decline of 10% more from recent highs.
Yet analysts say that the plunge in NFLX stock is also due to negative news pertaining to the company that has shaken investor confidence in the shares. This negative news includes reports that Netflix does not plan to bid on season-long sports packages, a move that many analysts had been encouraging the company to pursue as a means of boosting its subscribers.
Slowing Subscriber Growth?
Also weighing on NFLX stock is a report by equity research firm MoffettNathanson that questions Netflix future subscriber growth. The report argues that subscriber growth from recent password-sharing crackdowns and a new ad-supported streaming tier is likely to come to an end.
“It is likely Netflix has a few more quarters of strong subscriber growth driven by its content slate and ad-tier, but we do expect the benefits of the password-sharing crackdown to slow,” wrote MoffettNathanson. Other analysts see the current slide in NFLX stock as being the result of its high valuation, with its shares trading at 45 times future earnings estimates.
NFLX stock has risen 47% over the last 12 months.
Is NFLX Stock a Buy?
Netflix stock has a consensus Moderate Buy rating among 39 Wall Street analysts. That rating is based on 27 Buy, 11 Hold, and one Sell recommendations issued in the last three months. The average NFLX price target of $1,100.57 implies 23.57% upside from current levels.
