Steve Weiss of Short Hills Capital bought back into Netflix at about $71 after exiting in June, calling it a tactical trade against extreme sector negativity rather than a conviction call. The re-entry followed Wells Fargo's downgrade to Underweight with a $57 target on softening engagement, leaving the stock down 41.75% over the past year. Netflix reports Q3 results on Oct. 20 with guidance of $12.86 billion in revenue and $0.82 in diluted EPS.
Steve Weiss, founder and managing partner of Short Hills Capital Partners, said on CNBC's Halftime Report on Sept. 23 that he added to his Netflix Inc. (NASDAQ: NFLX) position after Wells Fargo cut the stock to Underweight, reversing an exit he made in June.
"I'm not feeling particularly good about any of the streamers," Weiss said, describing the purchase as a tactical trade against extreme negativity in the sector rather than a conviction call. He had sold in June and watched the shares fall 15.95% without him before deciding the bad news was already reflected in the price.
Wells Fargo analyst Steven Cahall lowered his rating to Underweight from Equal Weight and cut his price target to $57 from $80, citing user engagement trends and a weaker second-half 2026 original-content slate. The firm's base case projects a 21% year-over-year decline in viewing hours from the platform's top 100 originals, and flagged rising subscriber churn risk into next year. The $57 target implies more than 25% downside from the current price.
Netflix traded near $71.49, down 41.75% over the past year from $122.74 and off 23.89% year to date. The stock fell 8.23% in the week after the downgrade and sits well below its $85.30 200-day moving average. The five-year record is starker: NFLX is up 20.3% since September 2021, while the SPDR S&P 500 ETF (NYSEARCA: SPY) has returned 73.41% over the same span.
The bearish call is an outlier. BMO holds an outperform rating and a $135 target, and an Alpha Vantage-aggregated consensus target sits at $92.93, with 28 buy and 7 strong buy ratings against 16 holds and zero sells. On the same CNBC program, Josh Brown called Netflix his biggest mistake of 2026, pointing to YouTube's growing TV viewership and a long stretch without an original show that generates conversation.
Weiss's bull case rests on operating numbers rather than sentiment. Netflix reported Q2 2026 revenue of $12.56 billion, up 13.4% year over year, with an operating margin of 33.4%. Management guided full-year top-line growth of 13% to 14% and expects advertising revenue to roughly double to about $3 billion in 2026. The company repurchased $4.7 billion of shares in the quarter, its largest buyback ever, leaving $27.1 billion of capacity, according to the Q2 8-K shareholder letter. Netflix counts 330 million subscribers, and its forward P/E has compressed to 19 from a trailing 23.
The structural risk Weiss concedes is margin. Live sports and premium entertainment are expensive to acquire and deliver, and he pointed to Disney's 13% price increase on Disney+ as evidence of the pricing defense every streamer is being forced into. Netflix plans to grow content spend about 10% in 2026, with live programming consuming 5% of the content budget while producing 1% of view hours. Management argues those hours overperform on acquisition and advertising, but they carry premium costs.
For holders, the split leaves the shares hostage to a single print. Netflix reports Q3 2026 results after the close on Oct. 20, with management guiding revenue of $12.86 billion, an operating margin of 33.2%, and diluted EPS of $0.82. Any deviation from that guide, in either direction, will likely settle the standoff Weiss is trading around.
This article is for informational purposes only and does not constitute investment advice.
