Needham downgraded Netflix on Tuesday with the analyst Laura Martin predicting the company may lose as many as 4 million U.S. subscribers next year in its premium tier.
Martin moved her rating to underperform (equivalent of a sell) from hold and added she was concerned the company's balance sheet can't "withstand lower revenue." Netflix has come under increased pressure as the streaming wars heat up with the recent launches of Disney+ and Apple TV+.
Shares of the company were down 1.6% to $297.50 in early trading. As of the end of the third quarter, the company said it had just over 60 million U.S. subscribers.
"We downgrade NFLX because it has consistently stated it will not have advertising, which we believe will result in U.S. sub losses," wrote Martin, who is one of the widely followed analysts in the space.
Martin's picks have returned 21% one year out, putting her among the best on Wall Street, according to TipRanks. Her calls have a success rate of 66%, according to TipRanks.