Netflix slips as Benchmark downgrades on worries over subscriber growth, negative press
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Netflix (NASDAQ:NFLX) shares slipped on Tuesday as investment firm Benchmark downgraded the streaming giant, citing concerns over the ability to grow subscribers, foreign exchange headwinds and negative press.
Analyst Matthew Harrigan lowered the rating on Netflix (NFLX) shares to sell from hold and cut the price target to $157, noting that the firm is "skeptical" on a recovery in Netflix shares, even despite the low earnings multiple, pointing out an estimated 3% free cash flow yield for 2023 is not enough to excite investors. 
"Beyond the inflation challenged and more price sensitive consumer, the continued negative Netflix press glut, relating to member losses and even Prince Harry and Meghan, is a mild growth albatross," Harrigan wrote in a note to clients. 
In January, Benchmark upgraded Netflix (NFLX) to hold, following its fourth-quarter results.
Netflix (NFLX) shares fell nearly 2% to $166.61 in premarket trading on Tuesday.
In addition, Harrigan pointed out that the market is now "very jaded" on the valuations of streaming companies such as Disney (DIS), Roku (ROKU) and others, and Netflix (NFLX) could see further downward pressure if subscriber growth and operating profit margin both stall out. Subscriber growth could also be "dampened" in Latin America and the U.S. Hispanic markets, due to the emergence of advertising-support video on demand services from TelevisaUnivision's Vix.
On Monday, Netflix (NFLX) announced that Ken Barker would be its new accounting officer, taking over the role from its Chief Financial Officer Spencer Neuman, but that did not factor into the downgrade, Harrigan noted. 
Separately on Monday, Netflix (NFLX) announced a second season of its global mega-hit drama, Squid Game. 
Analysts have been cautious on Netflix's stock (NFLX). It had an average rating of HOLD from Wall Street analysts, while Seeking Alpha authors rate it slightly higher at a BUY. Conversely, Seeking Alpha's quant system, which consistently beats the market, rated NFLX a SELL.