Netflix (NFLX) Stock Tumbles as YouTube Eats Into Its Market Share

Key Takeaways

Table of Contents

Shares of Netflix declined 1% on September 23, marking an 11% monthly decline and a 23% year-to-date loss.
HSBC downgraded Netflix from Buy to Hold, reducing its price target from $96 to $76 due to YouTube’s expanding market presence.
YouTube achieved an all-time high of 14.2% of U.S. television viewing in July, while Netflix’s share decreased to 7.8%.
Wells Fargo issued a downgrade, projecting a 21% year-over-year decline in viewing hours for Netflix’s top 100 original programs.
The streaming platform is pivoting toward live sports programming and advertising, with 2026 U.S. upfront ad commitments almost doubling compared to the previous year.

Netflix shares ended trading on September 23 with a 1% decline, settling at $71.36. This represents another setback in a challenging month that has seen the streaming service lose 11% in September alone, contributing to a 23% year-to-date decline.

Netflix, Inc., NFLX

By comparison, the S&P 500 has climbed 13% during the same timeframe, highlighting Netflix’s underperformance relative to the broader market.

The stock’s weakness stems from mounting concerns among investors. Data suggests audiences are increasingly favoring YouTube over Netflix for their viewing time.

HSBC formalized these concerns with an analyst note released on September 22. The financial institution downgraded Netflix from Buy to Hold while simultaneously cutting its price target from $96 down to $76.

According to analyst Mohammed Khallouf, YouTube’s expansion into living room viewing has been remarkable. The platform captured an unprecedented 14.2% of total U.S. TV viewing time in July, representing an 80 basis point increase from the previous year.

In contrast, Netflix saw its share decline to a multi-year low of 7.8%, representing a 100 basis point decrease year over year. Khallouf attributed this erosion to weakening audience response to Netflix’s proprietary content offerings.

YouTube’s Competitive Strategy

YouTube has aggressively invested in compensating high-profile creators for exclusive material. The platform also launched a new “Shows” functionality during the summer months that replicates the episodic format traditionally associated with Netflix.

This evolution narrows the distinction between user-generated video platforms and conventional streaming services. It simultaneously increases Netflix’s costs to maintain a competitive content portfolio.

Wells Fargo reinforced the bearish sentiment with its own downgrade issued last week. The firm’s analysts anticipate a 21% year-over-year drop in viewing hours across Netflix’s top 100 original programs.

HSBC’s research revealed comparable trends. English-language Top 10 content experienced approximately a 17% year-over-year decline in viewing hours during July and August combined.

Netflix’s second-quarter financial results compounded these concerns. Revenue fell short of analyst projections, third-quarter guidance disappointed investors, and viewing hours grew by a modest 2% during the first six months of the year.

Netflix’s Strategic Response

Facing these headwinds, Netflix is doubling down on two key initiatives: advertising revenue and live sports programming. The company reports that its U.S. upfront advertising commitments for 2026 have nearly doubled compared to last year’s figures.

The platform has also enhanced its advertiser toolkit, introducing automated ad purchasing capabilities and more precise audience segmentation. Live sports programming forms a cornerstone of this strategic pivot.

Netflix secured the NFL’s inaugural regular-season game in Australia for its 2026 lineup. Additional programming includes a Thanksgiving Eve game and several other holiday matchups.

These live events have potential to attract casual viewers who typically avoid Netflix’s scripted programming. They also provide advertisers with access to large concurrent audiences—a rarity in the on-demand streaming landscape.

The stock’s valuation has compressed significantly. Netflix currently trades at approximately 21 times forward earnings, down from around 31 times at the conclusion of 2025.

However, HSBC increased its content expenditure projections for Netflix in 2027 and 2028 while simultaneously reducing earnings-per-share estimates for those years. Higher spending without corresponding engagement improvements could sustain downward pressure on the stock.

Despite recent downgrades, Wall Street maintains an optimistic outlook overall. Analysts rate NFLX as a Strong Buy based on 25 Buy ratings, seven Hold ratings, and one Sell rating issued over the past three months, with a consensus price target of $94.34—suggesting 32% upside potential from current levels.

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