Is Netflix (NFLX) a Smart Investment Pick?

Tidefall Capital LP, an asset management firm, published its first-quarter 2022 investor letter – a copy of which can be downloaded here. A decrease of -1.2 percentage points was delivered by the fund’s institutional shares for the first quarter of 2022, still slightly better than the S&P 500 Index’s -4.6%, but below the TSX Index which increased 3.8% for the same period. Try to spend some time taking a look at the fund’s top 5 holdings to be informed about their best picks for 2022.

In its Q1 2022 investor letter, Tidefall Capital Management mentioned Netflix, Inc. (NASDAQ:NFLX) and explained its insights for the company. Founded in 1997, Netflix, Inc. (NASDAQ:NFLX) is a Los Gatos, California-based subscription streaming service and production company with a $77.9 billion market capitalization. Netflix, Inc. (NASDAQ:NFLX) delivered a -70.87% return since the beginning of the year, while its 12-month returns are down by -64.95%. The stock closed at $175.51 per share on June 17, 2022.

Here is what Tidefall Capital Management has to say about Netflix, Inc. (NASDAQ:NFLX) in its Q1 2022 investor letter:

“With Netflix (NASDAQ:NFLX) stock down by more than 50% since its high in November (and 10% below Reed Hastings’ $20m purchase in January) we re-entered the position in April believing we were being greedy when others were fearful. Unfortunately, its most recent results were well below expectations causing the shares to get cut in half (again).

(It’s interesting to note that this is not the first crisis for the company. In 2011, Netflix broke out its DVD service and streaming into 2 separate offerings, with the DVD by mail option called Quickster, the resulting price hike and confusion saw millions of subscribers leave and the stock fell 75%. The company would ultimately reverse the decision and continue its global ascent.)

In Q4 2021, Netflix forecasted for 2.5m – 4m net subscriber additions but ended up actually losing 200k (adjusted for exiting Russia they would have gained 500k subscribers). Q2 guidance was even worse as Netflix is now predicting that they will lose 2m net subscribers although the company still believes it will have positive net subscriber additions for the full year. Recent price hikes and an onslaught of new competitors are no doubt creating a more unfavorable competitive environment. However, we think it is important to step back and look at what Netflix has built and the advantages it now holds…” (Click here to see the full text)


alin-surdu-j5GCqQM3eYA-unsplash (1)

Our calculations show that Netflix, Inc. (NASDAQ:NFLX) ranks 13th on our list of the 30 Most Popular Stocks Among Hedge Funds. Netflix, Inc. (NASDAQ:NFLX) was in 109 hedge fund portfolios at the end of the first quarter of 2022, compared to 113 funds in the previous quarter. Netflix, Inc. (NASDAQ:NFLX) delivered a -53.89% return in the past 3 months.

In June 2022, we also shared another hedge fund’s views on Netflix, Inc. (NASDAQ:NFLX) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.

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