September 19, 2026
The rest of the Street disagrees. Here is the one number in October that ends the argument.
Wells Fargo turned outright bearish on Netflix on September 18, 2026, cutting the stock to Underweight from Equal Weight and lowering its price target to $57 from $80. Shares slid to roughly $71.66 midday Friday, down about 4.8% from the prior close of $75.31. The all-time closing high was $133.91 on June 30, 2025. That is a 46% drawdown on a company guiding to about $50.7 billion to $51.7 billion in revenue this year.
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The Bear Thesis
Wells Fargo analyst Steven Cahall’s report was titled “Engagement Risk” and noted that Netflix has been slipping in Nielsen’s Gauge, with its top 100 titles also seeing a slight year-over-year decline. One key claim circulating from the note, that viewing time per subscriber per day dropped 8% in the first half of 2026 compared with the same period in 2023, could not be verified from primary materials and should be treated as an estimate rather than a hard fact.
Wells says Netflix’s originals slate looks weaker in the second half of 2026, with its base case projecting the company’s top 100 originals hours will fall 21% year-over-year. The underlying theory is blunt: Netflix is trying to fight YouTube and may be suffering for it, given increased investment in video podcasts, creator deals, games and other genres. Cahall’s argument is not that those bets are worthless. His concern is that they could draw attention and resources away from the original programming that drives the platform’s strongest viewing spikes.
The Bull Counter
Wells Fargo’s $57 target is a new Street low and sits well beneath the roughly $97 consensus cited by multiple market-data summaries. Evercore ISI analyst Kutgun Maral maintained an Outperform rating and raised his price target to $110 earlier this week, tying his case to survey data showing a multi-year high for U.S. household penetration and record levels in Japan, alongside growing emphasis on live programming.
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The revenue trajectory supports the bulls. Netflix reported 13% year-over-year revenue growth for Q2 to $12.56 billion, with advertising revenue expected to roughly double to about $3 billion for the full year. Operating income rose 11% year-over-year to $4.19 billion, with operating margin at 33.4%. The company also has a $25 billion share repurchase authorization in place, one of the larger buyback authorizations in its history.
The Advertising Pivot Is the Real Swing Factor
If engagement is declining on the subscription side, the ad-supported tier is the offset. Netflix disclosed at its May 2026 Upfront presentation that its ad-supported tier had reached more than 250 million global monthly active viewers, and the company said the ads tier accounted for more than 60% of sign-ups in the countries where it is available.
Advertising revenue grew from essentially zero in 2022 to over $1.5 billion in 2025, with a projected further doubling to about $3 billion in 2026. Claims that this is the fastest advertising revenue ramp of any major streaming platform are difficult to substantiate cleanly across peers and should be read as commentary, not a measurable fact.
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Longer-term ad projections are more ambitious still. Some analysts project total advertising revenue expanding to $5.3 billion by 2027. The live sports portfolio anchors that advertiser pitch. Netflix will stream five regular-season NFL games in 2026, including a Christmas Day doubleheader, a Week 1 game from Australia, a Thanksgiving Eve game, and a Week 18 matchup. Claims about Netflix spending roughly $1 billion annually on live events, or paying up to $500 million for the five-game NFL slate, could not be verified from primary disclosures.
What to Watch
- ARPU convergence: In the UK, the ad tier’s growth is primarily being driven by members moving down from more expensive ad-free plans, challenging average revenue per user because advertising revenue has not yet balanced the subscription loss. Any color from management on when that gap closes is the single most important data point.
- Support at $70: The 52-week low is $65.08. A break below $70 on heavy volume opens a direct path to that level and puts Wells Fargo’s $57 target in range of becoming a near-term magnet.
- Q3 guidance confirmation: Netflix guided Q3 revenue growth of about 12%, supported by membership growth, pricing, and advertising revenue, while projecting an operating margin of 33.2%. Any revision to that guidance in October is the deciding data point for the bull-bear debate.
Netflix has said it is under 45% penetrated into addressable households worldwide and is only about 5% of global TV viewership share, with management estimating a roughly $670 billion addressable revenue opportunity. The stock’s problem is not the long-run potential. It is whether the ad business scales fast enough to cover a content slate that, for now, is generating less heat than it did two years ago.
