In this article, we will take a look at the 5 most overvalued companies according to the media. To see more such companies, go directly to 10 Most Overvalued Companies According to the Media.
5. Netflix, Inc. (NASDAQ:NFLX)
Number of Hedge Fund Holders: 102
While Netflix, Inc. (NASDAQ:NFLX) recently impressed the Wall Street with a strong earnings report for the third quarter, there’s no shortage of analysts who believe the video streaming stock is overvalued. Earlier this year, Matthew Harrigan from The Benchmark Co. said that Netflix, Inc. (NASDAQ:NFLX) was “heinously overvalued” while talking to CNBC. Mike Nicolas, Oakmark portfolio manager, also said in a program on CNBC that valuation concerns caused his firm to sell Netflix, Inc. (NASDAQ:NFLX) stock. Nicolas said that his firm had held Netflix, Inc. (NASDAQ:NFLX) shares for “quite” some time but given the changing economic backdrop, he was finding opportunities to invest in “out of favor” businesses that trade cheap on traditional valuation metrics.
Netflix, Inc. (NASDAQ:NFLX) shares have gained about 66% over the past one year.
As of the end of the second quarter of 2023, 114 hedge funds tracked by Insider Monkey reported owning stakes in Netflix, Inc. (NASDAQ:NFLX).
RiverPark Advisors made the following comment about Netflix, Inc. (NASDAQ:NFLX) in its Q3 2023 investor letter:
“Netflix, Inc. (NASDAQ:NFLX): NFLX was a top detractor in the quarter on weaker than expected reported and guided revenue, despite 2Q subscriber growth that was well above expectations (+5.9 million versus estimates of +2.1 million). The company’s subscriber growth re-accelerated following the company’s crack down on password sharing, and the rollout of the advertising supported subscriber offering known as the Ad Tier, but the average revenue per user came in below expectations and is expected to remain muted in the near term. NFLX reiterated expectations for full year 2023 operating margins of 18-20%, and guided free cash flow to at least $5 billion, up from prior guidance of $3.5 billion. Despite the positive momentum in the company’s business, market participants took comments from management at a recent conference to mean revenue growth may be slower in the coming years than expected. This was not our interpretation of these comments.
In fact, the recent re-acceleration of subscriber growth, plus price increases on premium memberships and a stabilization of content investments, should position the company for low double digit annual revenue growth over the next few years while driving improved operating margin to more than 25% (revenue grew 3% for 2Q23 and operating margin was 22.3%, up from 13% in 2019). We also believe that the stabilization of content spend should allow the company to continue to scale its FCF.”
