Goldman Sachs analyst downgrades stock Netflix (NFLX)
, eBay (EBAY)
and game giants/metaverse Roblox
to a rare “sell” rating on Thursday. Goldman Sachs analysts previously rated these stocks at a lukewarm “neutral”.
Analysts said the downgrade came after they decided “to include the greater likelihood of a weaker macro environment and solidly lower earnings growth … to reflect a broader maturation of the industry.”
In other words, rising tariffs, increasing competition, and the fact that consumers are less worried about Covid and are leaving their homes more often than taking shelter in place, chasing Netflix, Roblox, and eBay.
Shares of the three companies all plunged about 3% to 4% in early Friday trading.
Goldman Sachs analysts said they were downgrading Netflix due to “concerns around the impact of the consumer recession as well as increasing levels of competition.” They say that Netflix is now a “story about me”.
There is a growing concern that cash-strapped consumers may find they are now paying too much for streaming services and need to cut back.
Netflix is no longer the only streaming game in town, because Disney (DIS)
, Amazon (AMZN)
, Apple (AAPL)
, most important
, Comcast (CMCSA)
and CNN owner Warner Bros Discovery
all have their own service with exclusive content.
Goldman Sachs doesn’t seem too concerned about competition for Roblox, saying it’s still “the best-positioned company in the interactive gaming/entertainment business” and has good “long-term secular growth opportunities”.
But there is “raising concern around the post-pandemic environment” for Roblox. Goldman analysts expect “slowing growth” in the near term.
As for eBay, analyst Goldman Sachs noted that “with the global consumer environment under pressure and eCommerce growth slowing in a post-pandemic world, we see … eBay revenue growth at risk, [especially] given its excessive exposure to international markets.”
Goldman Sachs analysts also reiterated their “sell” ratings on other major tech companies: Airbnb
. Analysts cut their price target on Airbnb from $150 to $95. The stock is currently trading around $110.
Analysts said that while “pending travel demand … remains a drag,” there are concerns about a recession, stock valuations and the possible “potential normalization of consumer travel habits” leading more people to stay in hotels as opposed to renting a house when they go on vacation.
Still, it’s not all the doom and gloom of the so-called Vampire Squid of Big Technology.
Goldman Sachs analysts say they maintain their buy rating at Amazon (AMZN)
, Uber (UBER)
Facebook owner Meta Platforms
Google and YouTube parent Alphabet (GOOGLI)
Internet tycoon Barry Diller IAC (IAC)
and its real estate technology spinoff wind (ANGI)
as well as online dating apps Suitable (MTCH)