Netflix Falls 4% as Wells Fargo Cuts Rating to Underweight With $57 Target; Disney Barely Budges

Wells Fargo slashed Netflix to Underweight with a $57 target, citing softening engagement, while NFLX already sits 22% in the red YTD.

Evercore ISI's Kutgun Maral countered with a $110 target, pointing to record household penetration in Japan and multi-year highs in the U.S.

DIS held flat and the XLC sector ETF gained while Netflix dropped, confirming the selloff is stock-specific, not sector-wide.

Netflix ( NASDAQ:NFLX ) stock is falling in Friday morning trading after Wells Fargo cut its rating and slashed its price target on the streaming leader. Shares are down 4% to $72.08, extending a punishing stretch that leaves the name deep in the red for the year.

The Communication Services Select Sector SPDR ETF ( NYSEARCA:XLC ) is up 0.26% this morning. Meanwhile, the SPDR S&P 500 ETF Trust ( NYSEARCA:SPY ) is down 0.3%. That split makes today's Netflix drop read as a stock-specific repricing rather than a sector or broad tape event.

Walt Disney ( NYSE:DIS ) stock is at $105.31, basically unchanged. Disney's flat tape reinforces that the selling is contained to Netflix rather than spreading across the streaming complex, even with the two names sitting inside the same sector fund.

Wells Fargo analyst Steven Cahall downgraded Netflix to Underweight from Equal Weight and lowered his price target on the stock to $57 from $80. Cahall's stated concern is softening viewer engagement at Netflix and a weaker slate of original series in the second half of the year, with subscriber churn risk rising into next year.

Learn 7 Secret Wealth Tips High Net Worth Investors Use

How do you continue to grow a seven-figure portfolio in retirement? The last thing you want is to run out of money, you want your money to generate lasting income while you enjoy your life.

Learn seven strategies high net worth investors use with new report: The Seven Secrets of High Net Worth Investors from Fisher Investments. Get your guide here (sponsor)

Cahall also allowed that he could be wrong, pointing to Netflix's record content spending and its history of delivering unexpected hits. That kind of caveat isn't unusual on a bearish call for a name with this much operating leverage and this much content in the pipeline. It also frames the downgrade as a debate over the second-half slate rather than a call against the Netflix business model.

Netflix stock is down 22% year to date (YTD), so the downgrade lands on a chart that has already priced in a lot of sentiment damage. The company said this week that it will report Q3 2026 numbers in the coming earnings cycle, which puts the timing of the Wells Fargo cut squarely ahead of a fresh operating update from Netflix.