Stock Market Today, Sept. 18: Netflix Falls on Analyst Downgrade and Slashed Price Target

Source The Motley Fool

Netflix (NASDAQ:NFLX), a global subscription streaming platform with live content and originals, closed at $71.79, down 4.67%. Wells Fargo (NYSE:WFC) downgraded the stock and cut its target, citing weaker engagement and content concerns. Investors are next watching for earnings, second-half content, and margin trends.
Trading volume reached 87.2 million shares, coming in about 116% above its three-month average of 40.4 million shares. Netflix IPO'd in 2002 and has grown 59,888% since going public.

How the markets moved today

The S&P 500 (SNPINDEX:^GSPC) closed at 7,650.50, up 0.17%, while the Nasdaq Composite (NASDAQINDEX:^IXIC) finished at 26,523, up 0.39%. Among entertainment streaming services and subscription video-on-demand peers, Walt Disney (NYSE:DIS) closed at $102.67, down 2.54%, and Comcast (NASDAQ:CMCSA) closed at $22.74, down 0.74%, showing softer trading across the group.

What this means for investors

On Friday, Wells Fargo analyst Steven Cahall downgraded Netflix to "underweight" and reduced the price target from $80 to $57, according to reports. That implies another 20% downside for the stock even after today's slide.

The analyst pointed to weaker engagement with concerns that Netflix hasn't recently produced highly popular original content. Investors also worry that increased live-content spending will pressure margins.

Investors should note, though, that another analyst countered with a $110 stock price target. Evercore ISI's Kutgun Maral focused on international penetration.

The next catalyst for Netflix stock may be its earnings report on Oct. 20, when management guidance may help determine which view is more accurate.

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Wells Fargo is an advertising partner of Motley Fool Money. Howard Smith has positions in Netflix and Walt Disney. The Motley Fool has positions in and recommends Netflix and Walt Disney. The Motley Fool recommends Comcast. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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