Citigroup downgrades Netflix to address revenue growth concerns

Citigroup analysts have revised their outlook on Netflix, raising their rating on the streaming giant to “hold” from “buy” amid concerns about the future of revenue growth and margins.

The decision announced today stems from concerns about rising content costs and uncertainty surrounding the company’s stock buyback plans.

Analysts predict that Netflix’s content spending will rise to about $20.4 billion by 2025, a massive increase that could put pressure on the company’s finances. This expected cost increase raises doubts about Netflix’s ability to expand earnings before interest and tax (EBIT) over the next two years.

Despite the downgrade, it’s worth noting that Netflix stock has seen significant growth over the past year. The company’s results were strong, but Citigroup’s analysis suggests caution should be exercised given the financial challenges ahead. Investors and analysts will now focus on how Netflix manages its content budget and whether it can maintain its growth trajectory amid such cost pressures.

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