Netflix stock NFLX fell 2% on Tuesday after HSBC downgraded the streaming company, citing growing competition from Alphabet’s YouTube and concerns about near-term viewer engagement.
HSBC lowered its rating on Netflix to Hold from Buy and cut its price target to $76 from $96.
The firm said YouTube is taking an increasing share of US television viewing, making a near-term recovery in Netflix engagement less likely.
YouTube gains ground on Netflix
HSBC identified YouTube’s growing presence on television screens as a key concern for Netflix.
According to HSBC, YouTube captured a record 14.2% share of US TV time in July, while Netflix’s share declined to 7.8%, its lowest level in several years.
The firm believes YouTube’s momentum is increasingly coming at Netflix’s expense as the Google-owned platform expands its presence in living rooms.
The shift puts greater focus on Netflix’s ability to maintain its share of viewing time as consumers divide their attention across streaming and other video platforms.
HSBC’s downgrade comes as Netflix faces broader concerns about engagement trends and the strength of its content offering.
Wells Fargo also raises engagement concerns
HSBC’s cautious view follows a downgrade from Wells Fargo last week.
The firm cut Netflix to Underweight from its previous rating and lowered its price target to $57 from $80.
Wells Fargo said Netflix’s engagement trends look worrying and pointed to concerns about the company’s original content slate in the second half of 2026.
The firm’s base case assumes Netflix’s top 100 original hours will decline 21% year over year.
Wells Fargo cited engagement risk as a reason for its downgrade.
The two analyst calls focus on different aspects of Netflix’s challenges.
HSBC is concerned about YouTube gaining viewer share, while Wells Fargo expects a weaker original-content slate could make it more difficult for Netflix to improve engagement in the near term.
BMO remains bullish on Netflix’s growth prospects
BMO Capital took a more positive view as analyst Brian Pitz maintained an Outperform rating and a $135 price target following proprietary consumer research.
He believes investors have become “overly negative” about Netflix as growth in its US and Canada businesses slows.
BMO surveyed 940 US consumers about their video-streaming habits.
The survey found that 75% of respondents subscribe to Netflix, while 37% identified it as their most preferred streaming platform, twice the level of the nearest competitor.
The firm also found that 76% of Netflix subscribers use the service multiple times per week.
Consumers indicated plans to increase the amount of time they spend on video streaming services and subscribe to more platforms than they did last year.
Pitz also sees Netflix’s advertising business as a potential growth catalyst.
He expects the company’s advertising operations to eventually accelerate revenue growth in the US and Canada, while video games and other incremental revenue opportunities could provide additional growth.
BMO said Netflix trades at 16.1 times fiscal 2027 estimated adjusted EBITDA, a 31% discount to its five-year average.
The firm expects the company’s advertising business to scale and support revenue growth.
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