4. Netflix, Inc. (NASDAQ:NFLX)
Number of Hedge Fund Holders: 115
Headquartered in Los Gatos, California, Netflix, Inc. (NASDAQ:NFLX) has become one of the most popular streaming services in the world, with over 208 million subscribers as of 2021. Netflix, Inc. (NASDAQ:NFLX) offers a wide range of content, including movies, television shows, documentaries, and original programming. In addition to its streaming service, Netflix, Inc. (NASDAQ:NFLX) also offers DVD rental by mail and has a distribution deal with cable and satellite television providers.
On November 15, 2022, Jessica Reif Ehrlich, an analyst at BofA, resumed coverage of Netflix, Inc. (NASDAQ:NFLX) with a price target of $370 and a Buy rating on the stock. According to the analyst, Netflix, Inc. (NASDAQ:NFLX) is a leading brand in a still-growing video-on-demand streaming sector. She believes that the company’s risk/reward is commendable, based on its solid path for subscriber growth outside of the United States and potential growth from video-on-demand advertising.
115 hedge funds were long on the company’s stock at the end of the third quarter, according to Insider Monkey’s database. Fisher Asset Management had the biggest long position in the company at the end of Q3 2022.
Artisan Partners made the following comment about Netflix, Inc. (NASDAQ:NFLX) in its Q3 2022 investor letter:
Netflix, Inc. (NASDAQ:NFLX) and Vertex Pharmaceuticals were two of our top contributors. Shares of Netflix got some relief after being under pressure in the first half of 2022. Media and entertainment stocks in general have been out of favor as investors grapple with the long-term economics of streaming services and slowing subscriber growth—what should be viewed as a normal feature of a maturing market. Our view is streaming is a scale and intellectual property business that will result in a few large winners, and we believe Netflix will be among this group. We initiated our position in Netflix in Q1 after shares fell by more than half due to concerns about subscriber growth and increasing competition from streaming upstarts. The stock then suffered a second down leg in April after the company reported subscriber losses for the first time in its history. Then in July, the company reported its second consecutive quarter of subscriber losses, but the nearly 1 million subscribers lost were much lower than the 2 million that management had forecast, and shares rallied on the news. For patient investors, there is reason for optimism that subscriber growth will turn around. The company has plans to crack down on password sharing and is launching a lower cost advertising supported tier. Our investment case is focused on an undemanding valuation, massive scale, a continued shift in time and attention from linear TV to streaming, and a financial condition which gives management the flexibility to operate unconstrained during a transition period for the business. We also believe Netflix can leverage its massive global scale of 200+ million subscribers into positive free cash flow through steady pricing increases and content spending controls.
