What happened
Shares of Netflix (NASDAQ: NFLX) were sliding today after a Jefferies analyst downgraded the company's stock from a buy rating to hold and cut his price target from $737 down to $415. Making matters worse, the broader stock market is experiencing a massive sell-off today as investors expect the Federal Reserve to raise interest rates in the coming months.
Netflix's stock fell by as much as 11% today and was down by 5.7% as of 1:52 p.m. ET.
So what
Jefferies analyst Andrew Uerkwitz downgraded Netflix's stock and cut its price target, saying that "the best content slate we've seen is doing little" to drive subscriber growth.
Image source: Getty Images.
Uerkwitz, and many investors, lost some faith in the video streaming giant after the company reported its fourth-quarter and full-year 2021 results last week. The company added 8.3 million subscribers in the fourth quarter, lower than the 8.5 million management had projected.
Additionally, Netflix's management said it would add just 2.5 million subscribers in the first quarter of 2022, a 38% drop from the year-ago quarter.
The stock has plummeted since the company released its fourth-quarter results, with its share price down 27% over the past several trading days.
Making matters even worse for Netflix investors today is the fact that the broader market is also losing ground. The S&P 500 slid more than 2% today as investors anticipate that the Federal Reserve will raise interest rates in 2022, starting as early as March.
Now what
While Netflix investors are right to be disappointed with the company's recent results, dumping the stock right now might not be the best long-term move.
There's no debating that Netflix probably won't be able to grow at the same pace as it has in the past, but with its current lead in the video streaming market and its ability to generate significant sales and earnings, the company could still make a solid long-term investment over the next several years.
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Chris Neiger has no position in any of the stocks mentioned. The Motley Fool owns and recommends Netflix. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
