Netflix saw its rating drop for the second time this week due to competition from YouTube

HSBC has changed its recommendation on shares of streaming giant Netflix from “buy” to “hold” and lowered its price target from $96 to $76, according to Bloomberg. The new target price is just 3.5% above the stock’s closing price from the last trading session.

HSBC analysts attributed the downgrade to the weakness of Netflix's content lineup and increased competition from YouTube.

YouTube is “rapidly expanding its presence in living rooms,” which is eroding Netflix’s position: the company’s share of U.S. TV viewing time has fallen to a multi-year low, wrote HSBC analyst Mohammed Hallouf. In his assessment, Google’s video streaming service is benefiting from the audience’s waning interest in Netflix’s original content, and a rapid recovery in engagement seems unlikely in the near future.

This is Netflix’s second rating downgrade in a week, Bloomberg notes. Just four days ago, on September 18, Wells Fargo Securities downgraded Netflix from “hold” to “sell” and lowered its price target for the company’s stock from $80 to $57. This estimate implies a 22% drop in the stock price relative to the closing price on September 21.

"Netflix lacks major original series, and it shows. We believe the company needs new blockbuster hits to turn its stock around," wrote analyst Stephen Cahall.

Netflix shares fell by more than 2% during trading on September 22. The stock is among the worst performers this year, having fallen by about 23%, according to Bloomberg. Meanwhile, the S&P 500 index has risen nearly 14% since the beginning of the year.

The stock's decline intensified after the company warned investors in July that sales growth had slowed for the second consecutive quarter. According to Bloomberg data, the market has reacted negatively to Netflix’s last five quarterly reports. The company will present its third-quarter report on October 20.

This article was AI-translated and verified by a human editor