Netflix, Inc. (NASDAQ:NFLX) is one of Jim Cramer’s favorite stocks, as throughout 2025, the CNBC TV host continued to praise the firm for its strong market position and diversification into new content categories such as UFC fights. With Netflix, Inc. (NASDAQ:NFLX)’s shares down by 21.6% year-to-date, Cramer discussed the firm in his morning appearance on September 18th after Wells Fargo’s latest coverage:
“When I read that piece [WFC coverage], I said, this is some time, a lot of people are chartists. And Netflix had, maybe the best chart in the book. And now, this shows you, because it was just now starting to curve up, I thought we were going to get through the reverse head and shoulders. And it just reminds you, don’t bank on the chart, talk about the fundies. Not the techies.”
The Wells Fargo piece cut Netflix’s share price target to $57 from $80 and reduced the rating to Underweight from Equal Weight. Viewership was at the center of the coverage as the bank argued that not only was the firm experiencing a drop in viewership, but its content roster for the remainder of the year was unlikely to sway viewers.
For Netflix, the debate has long centered on the firm’s ability to monetize its viewer base and maintain its growth trajectory. The reliance on monetization is a major reason why news of password sharing crackdown has generated headlines. On these fronts, the firm is expanding its presence into live sports streaming to further grow its user base and introducing ad-supported subscription tiers. The latter appears to be working, with anywhere between 45% to 60% signups in ad tier markets selecting these plans.
Ads add a new layer of revenue for Netflix, and data from Evercore shows that $3 billion in revenue this year could come from advertisements. Looking at the earnings, which were released in July, saw revenue grow by 13% annually and net profit margin sit at 27% to indicate that the alternative revenue streams were adding to the top line. Yet, at the same time, the firm’s bears outline that the competitive environment in 2026 is different from 2025. Rivals such as YouTube Premium have started to offer bundled packages, while short form videos also drive casual viewers away from Netflix. At the same time, management’s decision to release its What We Watched report only once a year from 2027 isn’t inspiring confidence either.
So, has this shifted environment impacted hedge fund sentiment? Well, in the second quarter, Insider Monkey’s data shows that 121 funds had disclosed a stake in Netflix, which marks a drop over the 144 funds in Q1. Some notable exits included Two Sigma Advisors, Bridgewater Associates and Point72 Asset Management. On the other hand, Bill Ackman’s Pershing Square added a massive $934 million stake to indicate that perhaps activist interest has started to grow. Valuation wise, NFLX trades at a forward P/E ratio of 19.19, which is higher than Disney’s 13.87. NFLX’s short interest as a percentage of float of 2.2% is higher than Disney’s 1.2%.
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