14% drop in a month, target price difference of $78: Wall Street argues for “two sets of standards” for Netflix (NFLX.US)

The Zhitong Finance App noticed that Netflix (NFLX.US) fell sharply by 14% in September, and its stock price dropped to around $71, approaching the low of $65 hit by the sell-off wave after the July earnings report. With a decline of 26% during the year, retreating 48% from the June 2025 high, the streaming giant is heading for its worst year since 2022 and is among the 50 worst performing constituent stocks in the S&P 500.

What is more striking than the stock price, however, is the split in the target price: the analysts' price targets covered the stock spanned from $57 to $135, with an average price of about $93, implying an upward margin of about 30% compared to the current price — long or short, and the target price difference was as high as $78.

Empty side: Engagement has become the only scoreboard, and the scoreboard is getting worse

Wells Fargo analyst Steven Cahall downgraded Netflix from “equal to the market” to “reduced holdings” on September 18, cutting the target price from $80 to $57, the lowest on Wall Street, and the stock's first “sell” equivalent rating in months. The logic goes straight to Netflix's new scoreboard: after the company stopped disclosing subscriber data, viewing time became the only verifiable metric in the market.

Cahall estimates that the adjusted viewing time for the first half of 2026 fell 8% year on year, with an average of about 1.6 hours per day; the viewing time for the top 100 original series in the second half of the year will decrease 21% year over year. “Netflix lacks blockbusters, and it has already been seen,” he warned. If its valuation logic moves closer to the “explosion-driven” media industry, the expected price-earnings ratio of 15 times means that the stock price still has room to decline by about 20%, putting the risk of losing subscribers in 2027 on the table ahead of time.

HSBC's perspective is external competition. The bank downgraded the rating from “buy” to “hold” on September 22, and the target price was lowered from $96 to $76. This is based on the fact that YouTube, a subsidiary of Alphabet (GOOG.US), is continuously eating away Netflix's share of TV in the living room: in July, YouTube's share of TV viewing time in the US reached a record high of 14.2%, while Netflix fell to a multi-year low of 7.8%.

Multiple parties: Don't use the US time to misinterpret global platforms

Deutsche Bank reversed the market and raised the target price to “buy” on Tuesday, fine-tuning the target price from $100 to $95. The bank believes that the market's “obsession” with US viewing time ignores the larger, fully addressable market: Netflix's international viewing time has gradually increased year-on-year over the past four and a half year cycle, the company has an “established competitive advantage and significant leadership” in international content production, and the current valuation provides an attractive entry point.

Evercore ISI came up with its own hard data: according to its 58th US quarterly survey and 12th Japanese semi-annual survey, the US household penetration rate reached 63%, a multi-year high, and Japan reached 22%, setting a new record; Japanese user satisfaction was 67%, and 58% of subscribers surveyed said it was unlikely or impossible to unsubscribe at all; 35% of US users considering leaving would switch to ad support packages. Based on this, Evercore raised its target price from $100 to $110, maintaining the “outperforming market” rating.

The bullish leader is BMO Capital. Analyst Brian Pitz maintained an “outperforming market” rating and a target price of $135 — the highest on Wall Street after surveying 940 American consumers.

According to the survey, 75% of respondents subscribe to Netflix, and 37% regard it as their preferred streaming platform, double that of the second-place rival; 76% of subscribers use it multiple times a week.

Pitz believes that the market is already “overly pessimistic” about Netflix and that the advertising business will be a catalyst, and points out that its current valuation is 16.1 times the adjusted EBITDA for the 2027 fiscal year forecast, a 31% discount from the five-year average.

Furthermore, Bank of America (target price of $125), UBS ($115), Citibank ($100), TD Cowen ($100), Goldman Sachs ($94), and KeyBanc ($92) still maintain their buying positions.

The third quarter earnings report became an important milestone

The bottom line of this debate is a misalignment of methodology: when the empty side looks at “how long each subscriber sees”, what they read is deterioration; when many people look at “how many households are using it,” they read resilience. Investor Eric Clark's “show-me story” (proving itself with performance) sums up the market consensus — Netflix needs blockbuster, top 100 series to prove that its content pipeline doesn't have creative issues, and rival streaming platforms are producing the most watched series.

It is worth noting that the sell-off was mostly individual stocks: Disney (DIS.US) only declined slightly, and the Communications Services ETF (XLC) did not fall but rose, indicating that this was a repricing of the content narrative rather than a sector clean-up.

The financial report for the third fiscal quarter on October 20 will be the next observation point, and the participation report to be released in January next year along with the fourth quarter results will be the final review to test which of the two sets of measures are right and wrong.