Netflix reimagined how we consume content at home, and its success spawned an entire streaming industry. Former founder and CEO Reed Hastings got lambasted for correctly shifting Netflix from at-home DVDs to streaming, a move that’s led to hundreds of millions of global subscribers, including me.
The ascent has been rewarding for early shareholders, given Netflix’s stock price has gained a remarkable 60,000% since its 2002 IPO.
Yet, competition is fiercer than ever, and cash-strapped consumers are looking closely at their budgets. What once felt like a “must-have” line item on my monthly budget increasingly looks less so, and I’m not alone.
According to fund manager Chris Versace, membership churn is rising at Netflix, hampering its business. The cause, in Versace’s view, is that Netflix is suffering from a content problem, and that won’t necessarily be fixed by Netflix’s decision this week to replace its Chief Content Officer ahead of next week’s earnings.
Netflix content fails to inspire ‘must-see’ confidence
The ability to maintain and grow subscribership is directly the result of creating and offering engaging content that goes viral.
“Consumers will move for the content they want to consume and deem to be “must see,” wrote Versace in a TheStreet Pro post. “The upcoming line-up at Netflix doesn’t have much of that.”
The returning series releasing in October are franchises with declining viewership, and each season seems to pull in a smaller audience than the last.
Consider the, perhaps ironically named, show “Nobody Wants This.” Season 3 is released on Oct. 22. Season 2 opened with 8.6 million views in four days — solid, but down 17% from Season 1.
Also read: Netflix faces unexpected challenge as streaming prices soar, customer interest shifts
Others have also seen declining viewership with each season, including “Lupin” and “The Diplomat” (one of my favorites on the calendar). Netflix’s release of Ben Affleck’s “Animals” has put up strong numbers, but critics have largely panned it.
On Rotten Tomatoes, Animals gets a 31% rating on the Tomatometer and 39% on the Popcornmeter. Hardly inspiring.
Netflix’s content calendar lands as Versace points out that member churn is rising, according to Apptopia data.
“Netflix’s U.S. churn picked up in Q3 2026. For the prior three quarters, that level of churn had been running around 8% according to its findings, but through July to September of this year, that figure crossed into double digits,” wrote Versace. “Apptopia’s data also shows that Netflix’s Average Time Spent per Daily Active User in U.S. has drifted lower in recent quarters.”
Mike Coppola / Getty Images
Netflix hires new content executive
Versace has been tracking stocks since the 1990s and manages a multimillion-dollar portfolio for TheStreet Pro. Netflix has been a core holding in that portfolio, but Versace wrote earlier this week that he had downgraded the stock and was looking to sell into strength.
Netflix announced it is replacing Chief Content Officer Bela Bajaria, who spent 10 years at Netflix, with producer and former Fox executive Peter Rice, effective Oct. 26. Following the announcement, Versace decided to sell Netflix entirely before earnings are released on Oct. 20.
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“Peter is one of the most effective at-scale operators in the entertainment industry. His business acumen is sharp, his talent relationships are exceptionally strong, and his experience across TV and film is deep and broad,” said Netflix CEO Sarandos.
Versace is less-than-convinced by Sarandos assurances.
“The naming of Rice, appears, at least on paper, to be a questionable choice given the poor reception for The Social Reckoning and his lack of streaming experience,” said Versace.
The Social Reckoning has grossed about $9.8 million worldwide since its release on Oct. 9, 2026, hardly a barnburner.
“We have to wonder, given the talent out there, if this was the best Netflix could do,” Versace added. “Our concern is that while Rice has the paper pedigree, he lacks the chops needed to reignite Netflix’s content slate that is central to driving and maintaining subscriptions and attracting advertising dollars.”
Fund manager sells Netflix ahead of earnings report
Versace’s decision to sell Netflix entirely from his portfolio lands only days before the streaming company is expected to release its third-quarter results.
Those results could move the stock up or down, but Versace doesn’t think the risk is worth waiting to see how it all plays out.
“We’ve seen how the market punishes stocks for only missing quarterly expectations or expected guidance by a hair. That implies more downside risk for the shares is a possibility we can’t ignore,” said Versace. “Reviewing Netflix’s recent earnings track record, it isn’t the clear beat-and-raise company that it once was. Heading into next week’s earnings report, consensus EPS figures for 2027 call for 5%-6% EPS growth.”
Versace is concerned about the timing of the content team shake-up ahead of the release, especially following word that Netflix plans to lay off 6,000 workers.
“Factoring in the timing of the headcount announcement raises questions over the ability of the underlying business to achieve that level of growth. In other words, the timing of that announcement some two weeks after wrapping the Q3 2026 quarter raises questions,” said Versace.
“The bottom-line is there are better opportunities to recover the ground we’ve lost with NFLX shares in companies with stronger competitive positions and better growth prospects,” he said.
Related: Netflix faces unexpected challenge as streaming prices soar, customer interest shifts
