Wolfe Research downgraded Netflix early Thursday, warning that "bears are winning the engagement debate" and that the subscription-based streaming service "has lost its mojo."
"Engagement failed to respond to rising investment, and last week's content leadership changes convince us that solutions require patience & lower incremental margins. Attention economy competition is rampant. Consensus estimates look fair," analyst Peter Supino wrote in a note on Thursday morning.
Supino estimates that engagement in the US and Canada was flat to down in the first half of 2026, even as programming investment increased. YouTube continues to gain television viewing share, while competitors including Amazon, Apple, Disney and HBO are increasing spending.
"Despite $3B of content expense growth over the last 2 years, Netflix has lost its mojo. YouTube keeps gaining TV share," the analyst wrote.
The lack of major new hits is a key driver of Netflix's stalled subscriber growth. Aside from the final season of Stranger Things, Supino said the streaming platform has struggled to sustain viewership growth for its biggest shows and films.
Last week, chief content officer Bela Bajaria was abruptly booted and will be replaced later this month by veteran entertainment executive Peter Rice in hopes of delivering content that subscribers actually want to watch.
Netflix has transformed into a woke programming operation for kids
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