Shares of Netflix Inc (NASDAQ: NFLX) are trading down at writing after they were downgraded to “peer perform” at Wolfe Research.

Peter Supino also removed his price objective on the streaming giant today.

The analyst is concerned that Netflix stock will not be able to maintain its massive premium to the broader market if growth slows down in the future.

There have already been reports of deceleration in advertising-based video on demand. He sees the risk-reward as “balanced” also because Netflix has recently signalled “less margin expansion”.

Netflix Inc is scheduled to report its Q3 earnings on October 18th. Consensus is for it to earn $3.47 a share versus $3.1 per share a year ago. Its shares are currently down 25% versus their year-to-date high.

Peter Supino downgraded NFLX this morning even though the mass media behemoth has recently launched a lower-cost ad-tier to create a new source of income.

The Nasdaq-listed firm is also going after password sharing in hopes of giving a nudge to subscriber growth. Last month, though, Spencer Neumann – the Chief Financial Officer of Netflix Inc said it’ll take time for both initiatives to turn instrumental.

He also projected that it will be difficult to maintain operating leverage at 300 bps per year.

Simply put, the Wolfe Research analyst says things have to go phenomenally flawless for the Netflix stock to justify its current valuation as it doesn’t really have any “margin of safety”.