NEW YORK - Netflix was downgraded to the equivalent of a sell at Needham, which reiterated its view that the video-streaming company was at risk of losing millions of US customers in 2020 given rising competition, including from low-cost rivals.
Netflix"has consistently stated it will not have advertising, which we believe will result in US sub losses," Needham wrote, adding that international subscriber growth"will not support NFLX valuations" because domestic users are significantly more profitable. While Netflix analysts have so far been confident that Disney+ isn't taking subscribers - and Apple's service is seen as needing a hit to retain viewers - Netflix's user trends have been a concern for months.
Needham's rating falling to underperform makes it at least the second downgrade that Netflix has received so far this month. Last week, Citi cut the stock to neutral, citing heightened competition and the company's"scant operating leverage."
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