Netflix (NFLX) stock fell 5.3% yesterday (Wednesday) to close at $65.04 on Nasdaq, its lowest close since August 2024. The streamer cut its 2026 advertising revenue target and guided fourth-quarter sales below analyst forecasts.
In the third-quarter report released on Tuesday, earnings per share of $0.87 beat the $0.82 consensus, and revenue of $12.87 billion matched expectations.
Investors focused on the outlook instead. Netflix now expects about $2.7 billion in 2026 ad revenue, down from roughly $3 billion, and fourth-quarter revenue of $13.44 billion against the $13.51 billion analysts had expected.
Shares touched $64.10 during the session, a new 52-week low. On my daily chart, the close landed 7 cents below the $65.11 support that held during the July sell-off, the floor Netflix had not closed under since August 2024.
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Is Netflix Stock Breaking Down?
Netflix closed below two lines at once. One is the $65.11 horizontal support. The other is the rising trend line drawn from the 2022 low, which ran under the stock through the 2023 to 2025 rally and now sits above the price on my zoomed-out daily chart.
The stock is 51% below its June 2025 peak of $134.09 and trades under both its 50-day exponential moving average at $72.92 and its 200-day EMA at $82.61.
Losing the floor of a range this wide opens the price zone Netflix traded in before mid-2024, which on my chart stretches from $65 down to the 2022 low of $16.09.
Advertising is where the outlook changed. A year ago, Netflix shares also fell about 5% after hours on the third-quarter report, when the company called it its best ad sales quarter ever and expected to more than double ad revenue, a goal that has now given way to a lower 2026 ad target.
Netflix also walked away in February from its agreed $72 billion purchase of Warner Bros. after Paramount Skydance made a higher offer.
How Low Can Netflix Stock Go?
Below $65, my chart shows three nearer supports before the extreme scenario. Distances are measured from Wednesday's $65.04 close.
Can Netflix Stock Fall 75% to Its 2022 Low?
Netflix has made a move of that size before. It fell about 77% from its November 2021 high to its May 2022 low, a slide that included a 35% one-day drop after the company reported its first subscriber loss in a decade.
I treat $16.09 as the most bearish case, not my base case. In 2022 Netflix was losing members, while in the third quarter of 2026 its revenue still grew about 12% from a year earlier.
At $16.09 the stock would trade at about 4.2 times the $3.79 per share analysts expect Netflix to earn in 2027, according to consensus data, compared with about 17 times at Wednesday's close.
Deutsche Bank analyst Bryan Kraft, who rates Netflix Buy with a $93 target, said "the market's reaction was overly punitive," TheWrap reported.
Analyst targets sit far above my extreme scenario. The lowest published after the report are $65, from Barclays, which cut from $70 and kept an Equal Weight rating, and from Pivotal Research, whose year-end 2026 target fell $5.
The median of all analyst targets is $88.26, about 36% above Wednesday's close.
What Analysts Said After Netflix Q3 Earnings
Most banks kept Buy ratings while cutting targets. Bank of America lowered its target to $90 from $105, Bernstein to $80 from $95, JPMorgan to $81 from $85 and Morgan Stanley to $77 from $80.
Needham analyst Laura Martin downgraded the stock to Hold from Buy and withdrew her $120 target. Netflix has named Peter Rice chief content officer in place of Bela Bajaria, and Martin does not expect a quick fix.
Martin wrote that Netflix's content problems "seem clear" and that she expects Rice to need about two years to fix the roughly $20 billion content slate, "with material write-offs before then," according to Benzinga.
She also sees Netflix losing ground to YouTube and expects single-digit revenue growth in 2027.
What Would Cancel the Bearish Netflix Scenario?
The breakdown is not confirmed yet. A daily close back above $65.11 would turn Wednesday's move into a false break, and a recovery above $70.45, my first resistance, would cancel the bearish scenario for now.
The weekly close on Friday, October 23, is the next test. A finish below $65.11 would confirm the break on a higher timeframe and put $58.86 next in line.
This article was written by Damian Chmiel at www.financemagnates.com.
Source: Finance Magnates
