You probably know the routine. You open Netflix after dinner, scroll past rows of thumbnails and settle on something you half watch. You don’t cancel, but you don’t rush back either.

That quiet drift is now the central problem at Netflix Inc. (NFLX). Churn improved year over year in the U.S. and beat the company’s forecast, according to its third-quarter shareholder letter. Yet the same letter concedes investors are worried about slow growth in viewing hours.

Netflix answered with a shakeup. It cut about 6% of its workforce this month, Reuters reported. It also named former Walt Disney Television chairman Peter Rice as chief content officer, replacing Bela Bajaria.

Third-quarter revenue then rose 12% to $12.9 billion, the slowest growth in nearly three years, Reuters reported. Netflix also trimmed its 2026 ad revenue forecast to about $2.7 billion from $3 billion, citing slower ad feature rollouts.

Also read: Netflix content, layoffs cause fund manager to sell shares before earnings

Jessica Reif Ehrlich still rates the stock a Buy, according to a BofA Securities research note shared with TheStreet. In the report, titled “Not changing the debate,” she cut her price target to $90 from $105. She wrote that the quarter “did little to change the narrative.”

BofA’s lower target prices in patience, not profits

BofA now values Netflix at about 20 times its 2027 EBITDA estimate, a measure of operating profit, down from 23 times. BofA’s 2027 EBITDA forecast fell only about 3%, to $19.5 billion.

The bank expects nearly the same profits but thinks investors will pay less for them. I read that as the most honest line in the note. It prices in time, not failure.

Waiting gets harder when the scoreboard shrinks. Netflix stopped reporting subscriber numbers in 2025, Reuters noted. Its second-quarter letter said its detailed viewing report will come out once a year starting in 2027.

BofA cut its Netflix price target to $90 from $105 but kept a Buy rating after the streamer lowered its 2026 ad revenue forecast to $2.7 billion.

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Free video is pulling viewing time away from Netflix

Members watched more than 97 billion hours in the first half of 2026, up just 2%, according to that letter. Pivotal Research analyst Jeffrey Wlodarczak warned that short-form video is doing to streaming what streaming did to pay TV, Variety reported.

That puts the burden on Rice’s slate. Live events take just over 5% of 2026 content spending but only about 1% of viewing hours, Netflix said in the same letter. Series and films still carry almost everything.

U.S. and Canada revenue grew 11% in the third quarter, down from 17% a year earlier, according to the latest letter. That region still delivers about 44% of revenue, which is why BofA says management wants bigger hits there.

Ads raise the stakes because advertisers buy viewing time. Co-CEO Ted Sarandos acknowledged that Netflix “could do better,” Reuters reported.

More Netflix:

  • Why Goldman Sachs still backs Netflix despite falling viewership
  • Wall Street bank backs Netflix despite U.S. drift to YouTube
  • Down 46%, is Netflix a buy now?

Wall Street is split on how long to wait

Shares fell 5.3% on Wednesday, October 21, 2026, according to StockAnalysis. The stock had already lost more than 26% this year before that drop, Reuters reported.

Needham’s Laura Martin downgraded the stock to Hold, warning that “rising competition drives margin compression and slowing revenue growth,” according to Seeking Alpha. Deutsche Bank’s Bryan Kraft countered that the market’s reaction was overly punitive. One fund manager had already sold his shares before earnings.

The 52 analysts tracked by StockAnalysis rate Netflix a Buy on average, with a mean target of $91.39. Its data also show two Strong Sell ratings, up from none in August.

The latest calls, all from Wednesday, October 21, 2026, according to StockAnalysis:

  • Buy, with a $90 target cut from $105: Bank of America Securities, Jessica Reif Ehrlich.
  • Hold, with a $65 target cut from $70: Pivotal Research, Jeffrey Wlodarczak.
  • Sell, with a $57 target maintained: Wells Fargo, Steven Cahall.

BofA thinks Netflix’s reset has room to run

Reif Ehrlich’s case rests on scale and cash. She calls the valuation undemanding for a service with more than 300 million paying subscribers, trading below 20 times earnings. She adds that Netflix has “repeatedly demonstrated an ability to adapt.”

Netflix bought back a record $4.8 billion of stock in the third quarter, according to its letter. This year’s $10.8 billion in repurchases has outrun $9.5 billion of free cash flow, its cash flow statement shows. Buybacks can steady a share price, but they cannot buy back viewers.

For subscribers, the reset should show up on screen before it shows up in the stock. The letter promises NFL games on Thanksgiving Eve and Christmas Day, plus a Tyson Fury vs. Anthony Joshua fight.

BofA’s verdict is a patient buy. The bull case says a cheap stock rerates once Rice’s slate lands. The bear case says viewers keep drifting to free video, and the discount deepens.

Streaming’s first era rewarded whoever signed up the most people. The next one rewards whoever keeps them watching, and Rice’s first slate is where that test begins.

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