J.P. Morgan Downgrades Netflix: What’s Behind the Move and the New Price Target
However, JPMorgan noted that Netflix served as a defensive investment during recent macroeconomic and tariff-related uncertainty.
Quick overview
- J.P. Morgan believes Netflix stock has already priced in much of its projected upside for 2025.
- Despite a positive long-term outlook, short-term conditions may temper Netflix's recent growth.
- Netflix shares have surged nearly 400% since October 2022 and are currently trading at all-time highs.
- While Netflix's fundamentals remain strong, risks such as seasonal weakness and a quieter catalyst path could impact performance.
According to the bank, Netflix stock likely already prices in much of the company’s projected upside for 2025.
While J.P. Morgan maintains a positive long-term view of Netflix’s leadership in the streaming space, the bank notes that short-term conditions may temper its strong recent growth.
It’s worth noting that Netflix shares are now trading at all-time highs, having surged nearly 400% since October 2022, far outperforming the broader market.
Previously, the Wall Street firm raised its price target for Netflix to $1,220 by December 2025, up from $1,150. However, it now believes the current valuation already reflects much of the anticipated upside.
At these record highs, Netflix is trading at 39x JPMorgan’s 2026 GAAP EPS estimate and 44x projected free cash flow (FCF).
Alongside the downgrade, JPMorgan also removed Netflix from its U.S. Equity Analyst Focus List.Netflix: The
Pandemic-Era Star Begins to Slow Its Pace
JPMorgan noted that Netflix served as a defensive investment during recent macroeconomic and tariff-related uncertainty — but that could shift if broader conditions continue to improve.
If concerns around tariffs and macro conditions keep fading, investors should expect a rotation toward other internet names and parts of the market that have been more vulnerable and under pressure.
Still, Netflix’s fundamentals remain solid. The bank projects double-digit revenue growth (FX-neutral) through 2026, margin expansion, growing free cash flow, and increased share buybacks.
Advertising is also gaining traction, with the ad-supported tier reaching meaningful scale. Netflix expects to double its ad revenue in 2025.
In the near term, however, JPMorgan sees some risks, including seasonal weakness during the summer and a quieter catalyst path following the company’s Upfront event. While the upcoming content slate remains strong, the risk/reward profile is now less compelling following the stock’s recent outperformance.
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