Pivotal Research analyst Jeffrey Wlodarczak has dropped his price target for the streaming giant's stock to $350 a share, down from $515.
Netflix shares fell 3.2% to $257.37, after declining 1.78% on Monday to $265.92.
Pivotal, which has been bullish on Netflix, said it believes the streaming company has what it takes to win an all-out war for subscribers in an increasingly competitive streaming field.
While Walt Disney (DIS) - Get Report , Apple (AAPL) - Get Report , Amazon.com (AMZN) - Get Report , Comcast's (CMCSA) - Get Report NBCUniversal, and AT&T's (T) - Get Report HBO are all ramping up their own streaming offerings, Netflix is one of the few players with the financial resources to keep up the "spend levels" needed to come out on top, according to Pivotal.
The field is likely to narrow over the long-term to a duel between Netflix and Disney, with Amazon "on the periphery."
But Pivotal sees Netflix's profitability taking a hit over the short-term as the streaming company responds to growing competition in the field by "revving up their own content spend."