Netflix' s stock may struggle to rebound until the company can change its story after years of success, according to investment firm Jefferies. The streaming giant's stock fell more than 21% on Friday after Netflix reported disappointing subscriber guidance for the first quarter. Wall Street analysts responded with downgrades and price target cuts . Jefferies analyst Andrew Uerkwitz followed suit Monday, downgrading the stock to hold from buy and saying in a note to clients that Netflix had reached a pivot point in its growth story. "Netflix subscribers are going nowhere — engagement is strong and churn is low. However, the cost of acquiring the incremental sub has likely become too high," Uerkwitz wrote. "The best content slate we've seen is doing little to drive sub growth. ... We believe the narrative needs to shift towards [free cash flow] growth, potential second acts, and [management] becoming good stewards of capital allocation." The streaming video industry may be entering a period of slowing growth for new shows and movies, Jefferies said. Going forward, Netflix may need to shift its spending away from streaming video and toward video games, which "we see as nearly perfectly aligned with Netflix's business model," the analyst said. "One quarter doesn't make a trend, and we may be overcomplicating our thesis here. However, if slower subscriber growth is the new normal, we would need to see a change in content/[capital] allocation coupled with a focus on new revenue streams to leverage the large user base/content library," the note said. Jefferies cut its price target on Netflix to $415 per share from $737. The new target is about 4% above where the stock closed on Friday. Shares fell another 2.1% in premarket trading Monday. -CNBC's Michael Bloom contributed to this report.
