I personally don’t open Netflix as much as I used to. Instead, I find myself scrolling through Instagram. At first, I thought it was because I’m always busy with work, but later I realized my interests had just changed. And I know I am not alone in this because the same thing is showing up in Netflix’s official numbers.
Netflix (NFLX) shares have lost about 29.87% of their value over the past six months, and the stock now trades at around $71 after a small rally on Thursday. So many investors are wondering whether this fall is a warning of what’s to come or a chance to buy a strong company at a lower price. Goldman Sachs has a take on that.
The engagement problem behind the stock’s slide
Just like me, many people are starting to spend less time on Netflix than they used to. Sensor Tower data cited by Goldman Sachs shows that the total amount of time people spent on the Netflix mobile app fell by 20% year over year in the U.S. during the third quarter. It also reduced by 7% globally, Investing.com reported.
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Netflix’s monthly active users dropped by 10% year over year in the U.S. and by 1% in international markets. Nielsen’s Gauge report also noted that Netflix’s share of U.S. TV viewing fell from 8.8% to 7.8% over the last twelve months, while YouTube added about 80 basis points, according to The Motley Fool.
Why Goldman Sachs is still buying Netflix at $90
In a research note shared with me on Oct. 5, Goldman Sachs kept its Buy rating on Netflix and reduced its 12-month price target from $94 to $90. That new price target suggests that the stock will increase by about 27% from where it trades now.
Goldman Sachs analyst Eric Sheridan, who has covered internet and media stocks on Wall Street for close to two decades, told clients that the recent drop could be a chance for patient investors to buy the stock. He and his team noted that NFLX shares have dropped by about 10% since Netflix‘s earnings report on July 16, while the S&P 500 has increased by 3% within the same period.
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Netflix makes money by charging its viewers monthly subscription fees. It offers three main plans for viewers to choose from, and the cheapest one includes ads. Although that ad-supported plan is the cheapest, it now plays a key role in how Wall Street views the stock.
How ad revenue could still carry Netflix forward
Sheridan’s team believes the issue of Netflix’s content can be fixed. They wrote in the note that, “We come away not thinking that NFLX has a scale of content problem but that it must improve its mix.” According to them, live sports and event programming are areas that can help to boost Netflix’s engagement and also feed the ad business.
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Netflix expects its ad tier revenue to roughly double year over year in 2026, and Sheridan’s team added that the company’s digital advertising work “keeps us very positive that NFLX’s advertising revenue (& its platform positioning) remains in a position of gaining operating and competitive momentum.”
What this means for investors eyeing Netflix stock
Netflix is shifting from a company that makes money purely from subscriptions into one that makes money from a mix of subscriptions and ads. In my view, that shift changes the company’s risk profile and gives Wall Street a new factor to consider every quarter.
The stock still has its risks. Goldman flagged that subscription cancellations due to price hikes, slower ad-tier growth, and the chance that Netflix buys a costly intellectual property could all affect the company’s near-term profit. For readers considering buying the stock, Goldman Sachs still recommends buying, but you could also wait for Netflix’s third-quarter earnings report later this month before making a final decision.
