5 Stocks to Buy Now Before the Bull Market Begins

2. Netflix, Inc. (NASDAQ:NFLX)

Number of Hedge Fund Holders: 109

Share Price Decline YTD as of August 16: 58.87%

Netflix, Inc. (NASDAQ:NFLX) stock has plummeted about 59% year to date. However, the company posted market-beating earnings for the second quarter of 2022. The Q2 EPS came in at $3.20, ahead of Wall Street estimates by $0.25. The shares gained over 5% on August 10, as part of the ongoing rally ever since Netflix, Inc. (NASDAQ:NFLX) posted the most recent earnings report.

Netflix, Inc. (NASDAQ:NFLX) stock has climbed 16% since the company reported Q2 earnings, as the narrative moves towards its improved free cash flow outlook and 2023 initiatives of advertising supported tier and paid sharing, despite “modest” subscriber growth expected in the second half of 2022, JPMorgan analyst Doug Anmuth told investors in a research thesis. The analyst thinks Netflix, Inc. (NASDAQ:NFLX) has urgency around both, raising revenue growth and generating higher free cash flow, with the latter supported by flattish content expenditure over the next few years. He maintained a Neutral rating on the stock with a $240 price target.

According to Insider Monkey’s data, 109 hedge funds were bullish on Netflix, Inc. (NASDAQ:NFLX) at the end of Q1 2022, compared to 113 funds in the previous quarter. Bill Ackman’s Pershing Square held a prominent stake in the company in Q1, comprising 3.10 million shares worth $1.16 billion. 

Here is what Oakmark Fund has to say about Netflix, Inc. (NASDAQ:NFLX) in its Q2 2022 investor letter:

“Netflix‘s stock price was down considerably after providing a weaker than expected outlook for both subscriber growth and profit margins. After meeting with management and scrutinizing our investment thesis, we lowered our estimate of business value to account for the company’s softer near-term guidance. However, we believe the decline in the company’s share price more than adjusts for this. Indeed, Netflix now trades for a discount to the S&P 500 Index on next year’s GAAP earnings despite our view that the company remains a much better than average business run by a highly accomplished management team. We believe the company’s lead in streaming remains intact and we expect terminal operating margins to be substantially higher than they are today. Furthermore, we are encouraged by Netflix’s potential to enhance revenue growth through advertising, the monetization of password sharing and further penetrating international markets.”