Netflix's 2026 Slump Deepens as Engagement Worries Grow

What happened to the stock

That late-summer rally fizzled, and the shares are now down 24% for the year, placing Netflix among the S&P 500's poorest performers in 2026. The stock sits 47% below its peak from June 2025. On Tuesday, the shares were up 2.2% as of 10:03 a.m. in New York. Coverage remains broad at 65 analysts, but only 49 currently have buy ratings, the smallest tally since April, per Bloomberg data.

Why analysts and investors are worried

HSBC cut its view to hold last week on signs that subscribers are spending less time watching. Earlier this month, Wells Fargo also downgraded the stock, pointing to a shortage of standout programming and issuing Netflix's first sell-equivalent in months. In a Sept. 22 note, HSBC's Mohammed Khallouf said YouTube's gains are "increasingly coming at the direct expense of Netflix," citing "a declining reception to NFLX's original content," and warning that a "near-term recovery in engagement looks unlikely."

Investors are voicing similar concerns. "Netflix has become a show-me story because it is missing the mark on having real blockbuster, top-100-type shows, which is something that needs to be fixed lickety-split," said Eric Clark, Accuvest Global Advisors' chief investment officer. "In order to fix the engagement issue, you have to give people stuff worth talking about, and it's starting to seem like there's a creativity problem, because Netflix arguably has the most money to spend, but it's the other streamers getting the hot shows." Accuvest owns the shares but has been trimming its stake.

Not everyone is cautious. On Tuesday, Deutsche Bank's Bryan Kraft upgraded the stock to buy from hold, writing that Netflix has "an established competitive advantage" in international production, along with "the brand strength, global scale in subscribers/revenue, and organizational expertise to continue to broaden its position as a platform."

Where audience attention is shifting

Netflix still leads on paying subscribers, but in an ad-fueled world, minutes watched matter. Bloomberg Intelligence, using Nielsen's latest monthly data, estimates YouTube captured a record 14.2% of U.S. TV viewing in July, while Netflix's share fell below 8%. The idea that this year lacked breakout Netflix titles has hung over the stock for that reason. Bloomberg News also reported in July that even some well-reviewed series lost steam after season one.

Meanwhile, Apple's streaming service dominated this year's Emmys, and theaters have rebounded, powered by titles such as Obsession, Spider-Man: Brand New Day, and The Odyssey. The theater operators AMC Entertainment, Cinemark and IMAX have each climbed more than 50% in 2026, sprinting ahead of the S&P 500's 12% gain and the Nasdaq 100's 20% rise.

When headlines shift, steady planning helps protect and grow your long term savings. Join Briefs Finance CEO Jaspreet Singh on September 29th for a FREE live investor workshop, How to Profit From A Dollar That's Losing its Value, where he shows how we're spotting investment opportunities as the dollar falls. Save your spot.

Netflix's history of surprise smashes is long, with KPop Demon Hunters, Adolescence and Squid Game among the examples. A big swing is due in December: The Further Mis-Adventures of Cliff Booth, a sequel to Once Upon a Time… in Hollywood starring Brad Pitt. The company had explored buying Warner Bros Discovery but walked away earlier this year, a move some investors read as doubt about organic growth. A spokesperson for Netflix declined to comment.

Outlook and valuation

The next checkpoint is Oct. 20, when Netflix reports third-quarter results. Wall Street expects revenue to grow nearly 12% year over year, which would mark the slowest pace since 2023, and projects net income up 36%, versus 8% growth in the same quarter last year. Even with growth set to decelerate, the long-term bull case is alive, helped by a cheaper multiple: investors now pay about 19 times estimated earnings, which is over 60% below the roughly 50-times 10-year average.

Gerald Sparrow - chief investment officer at the Sparrow Growth Fund, a holder of the shares - said, "I don't think the concerns about competition are overdone, since everyone is fighting for the next bit of market share, but Netflix has a proven record of finding hits and moving into new growth areas like sports, podcasts and gaming." "The growth and valuation continue to look attractive, and the management team has been able to get out from overhangs like this in the past. It may not be this quarter, but I think in a year, we'll look back on these prices as an opportunity."

A calm, practical approach can keep your investments moving toward future goals. Our CEO Jaspreet Singh is hosting a FREE live investor workshop, How to Profit From A Dollar That's Losing its Value, on September 29th. Sign up free to join him live.