Analysts are starting to turn on embattled streamer Netflix Inc (NASDAQ:NFLX), with CFRA now downgrading the stock to Sell.
In a note, CFRA warned investors that shares of Netflix may underperform the S&P 500 Index for the rest of 2022.
An analyst also lowered the price target on Netflix stock to $238 from $245. Shares of Netflix sank 6.5% to rest at US$225 on Monday.
READ: Netflix and Amazon video subs cut in household cost squeeze but Disney+ a shining star
CFRA also wrote that earnings per share and EBIDTA, or earnings before interest, taxes, depreciation, and amortization, are likely to be lower in the second half of 2022.
“The key catalyst for NFLX — introducing new ad-pay subscription plans — may not be visible until 2023,” a CFRA analyst wrote.
Netflix stock has sunk 62% so far this year as investors and analysts start questioning the business fundamentals of the streaming company.
As per its 2Q results, Netflix realized only $103 million in operating cash flow and $13 million in free cash flow.
Only 28% of analysts still have a Buy rating on Netflix, while 57% rate them at Hold and 15% at Sell, according to FactSet. These figures are a sharp contrast from last September when 76% of analysts had Buy ratings, 15% rated Netflix at Hold and 9% said Sell.
Netflix still is the world's leading streaming entertainment service with 222 million paid memberships in over 190 countries. However, its quarterly subscriber growth rate has slowed sharply in recent years, going from 21.9% in full year 2020 to just 8.9% a year later in full year 2021. Its latest quarterly increase of 5.5% is the lowest in four years.
Contact Angela at angela@proactiveinvestors.com
Follow her on Twitter @AHarmantas