Investing.com -- Netflix shares are down approximately 20% year-to-date, a decline that Bank of America, in a note on Tuesday, attributed to three overlapping concerns, even as the bank reiterated a Buy rating and $125 price target on the stock, which closed at $73.83 on Monday.

Analyst Jessica Reif Ehrlich said the pullback reflects concerns related to engagement trends, potential AI-driven disruption to content creation, and heightened competitive concerns following recent media M&A activity.

On engagement, the bank noted Netflix's own reporting shows total viewing hours per subscriber "has been declining on a Y/Y basis," a trend bears argue is confirmed by Netflix's more active M&A posture and guidance for increased 2026 content spend.

BofA acknowledged Netflix's "M&A posture looks meaningfully more active than its historic 'builder, not buyer' stance," creating an overhang tied to business mix shift, execution risk, and whether Netflix can retain its historic valuation premium post-deal.

Other bear concerns include competition from YouTube and short-form video, along with net add runway in higher-ARPU developed markets.

Despite these overhangs, BofA drew parallels to 2022 and late 2023, when Netflix faced similar skepticism over subscriber growth and margins before rebounding through initiatives like paid sharing and its ad-supported tier.

Elsewhere, Morgan Stanley recently cut its Netflix price target to $90 from $115 while reiterating an Overweight rating, noting investors are on edge that "an earlier price hike in a seasonally tough period & lighter content slate could have driven more churn than usual."