Is it the Time to Sell Netflix (NFLX) Shares?

Investment management company River Oak Capital recently released its first half 2022 investor letter. A copy of the same can be downloaded here. In the first half of 2022, the fund’s book value per share decreased by 40.9%, and the investment return reduced by -39.8%. The compounded annual change in the book value is 10.9%, and the compounded investment return is 19.1%. In addition, you can check the top 5 holdings of the fund to know its best picks in 2022.

River Oak Capital discussed stocks like Netflix, Inc. (NASDAQ:NFLX) in the first-half 2022 investor letter. Headquartered in Los Gatos, California, Netflix, Inc. (NASDAQ:NFLX) is an entertainment services providing company. On September 30, 2022, Netflix, Inc. (NASDAQ:NFLX) stock closed at $235.44 per share. One-month return of Netflix, Inc. (NASDAQ:NFLX) was 4.13% and its shares lost 61.60% of their value over the last 52 weeks. Netflix, Inc. (NASDAQ:NFLX) has a market capitalization of $104.702 billion.

Here is what River Oak Capital specifically said about Netflix, Inc. (NASDAQ:NFLX) in its Q2 2022 investor letter:

“For a long time, I have been very impressed with how Netflix, Inc. (NASDAQ:NFLX) have repeatedly been able to pivot their business model, from initially renting DVDs to online streaming to producing their own content – outplaying their competition along the way.

My thesis for our Netflix investment was relatively straightforward. My assumptions were that in a few years’ time, Netflix would have:

– Revenue of ~$50 billion

– 300 million subscribers at an average subscription income of $14 per month

– Flattened out content spend; management has repeatedly stated that peak content spend was reached over the past two years

– $20 billion to $25 billion in content spend and less than $10 billion in other expenses would make Netflix a very profitable enterprise at a very attractive price.

Things have been well on their way along this path for a long time with subscribers going from 94 million to 220 million and average subscription income going from approx. $8.5 to $11.5 per month over the past five years…” (Click here to read the full text)

Photo by Souvik Banerjee on Unsplash

Netflix, Inc. (NASDAQ:NFLX) is in 19th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 95 hedge fund portfolios held Netflix, Inc. (NASDAQ:NFLX) at the end of the second quarter which was 109 in the previous quarter.

We discussed Netflix, Inc. (NASDAQ:NFLX) in another article and shared Pershing Square Holdings’ views on the company. In addition, please check out our hedge fund investor letters Q2 2022 page for more investor letters from hedge funds and other leading investors.

Disclosure: None. This article is originally published at Insider Monkey.