Netflix witnessed a drop of approximately 2% in premarket trading on Tuesday following a downgrade by Citi strategists, as reported by Investing.com.
Citi has revised its rating on the streaming giant’s stock from Buy to Neutral, citing concerns over “lofty expectations.” The optimistic outlook for Netflix in 2024-2025 has raised apprehensions, with analysts stating, “In short, we believe expectations are high.”
The analysts highlighted specific risks, including lower revenues, higher cash content costs, and potential mergers and acquisitions (M&A). While Netflix has not historically pursued large-scale M&A, the analysts suggested that it could become a possibility in the future.
Citi expressed that these risks have led them to no longer find the risk-reward ratio compelling, resulting in the downgrade of the stock.
However, analysts maintained their price target for NFLX stock at $500.00 per share, indicating a potential gain of around 3% based on Monday’s closing price.
