What happened

Shares of Netflix (NASDAQ:NFLX) have pulled back today, down by 4% as of 2 p.m. EDT, after some Wall Street analysts suggested that the stock may have gotten ahead of itself. Other analysts had been praising the dominant video streamer all week long, pushing shares to all-time highs yesterday.

So what

Netflix shares had gained 18% this week alone through yesterday's close. Investors believe the company will report better-than-expected net subscriber additions in the first quarter as much of the world stays home due to the COVID-19 pandemic.

Netflix interface

Image source: Netflix.

Bloomberg notes that several Wall Street pros have turned skeptical due to the company's lofty valuation, which may be pricing in unrealistic long-term expectations. Even a bullish analyst like Raymond James' Justin Patterson, who has a strong buy rating on Netflix shares, believes "further multiple expansion" is unlikely from here.

Benchmark analyst Matthew Harrigan thinks that the jump "seems excessive," according to the report, and initiated coverage with a sell rating. With a recession likely on the horizon, Harrigan is concerned that households will reduce discretionary spending on video-streaming services. Competition is also intensifying, so companies may essentially be competing for a shrinking pie.

"Despite high customer additions and lower churn, we are concerned with mounting streaming competition, potentially restricted pricing power from a global economic downturn and surveys suggesting that streaming services are among the first household budget items to be cut with job losses," Harrigan wrote in a research note to investors.

Now what

Netflix reports first-quarter results on April 21 and had previously forecast global net subscriber additions of 7 million. However, that guidance was issued in January, before the novel coronavirus crisis escalated exponentially around the world.