In this article, we are going to discuss the 10 best communication and media stocks to buy according to hedge funds.
The global telecommunications industry faces significant growth challenges amidst increasing demand for its essential services. Driven primarily by video traffic, global data consumption across telecom networks is expected to nearly triple by 2027. However, providers are experiencing limited pricing power in commoditized connectivity and data services, with internet access revenues projected to grow modestly at a 4% compound annual growth rate (CAGR) to reach $921.6 billion by 2027. Meanwhile, telecommunications companies (telcos) face substantial costs as they invest heavily in infrastructure to support 5G and other emerging technologies, with an estimated $342.1 billion investment forecasted for 2027 alone. These insights are highlighted in PwC’s inaugural Global Telecom Outlook, which underscores the strategic imperatives for telcos to sustain growth in a competitive landscape. Alongside traditional cost-cutting and optimization efforts, telcos are advised to explore growth opportunities such as IoT solutions, private 5G networks for businesses, fixed wireless broadband for households, and tailored digital infrastructure services for sectors like entertainment, healthcare, manufacturing, and mobility. Embracing these growth areas requires telcos to collaborate effectively within broader ecosystems that are reshaping the industry.
In the business-to-consumer (B2C) sector, telecommunications companies (telcos) are experiencing heightened demand driven by evolving user preferences, particularly as new devices with increasingly data-intensive requirements emerge, largely fueled by video content. By 2027, of the projected 9.7 million petabytes (PB) of data consumption, nearly 7.7 million PB (79%) will be attributed to digitized video content, surpassing all other categories combined. Over the same period, data consumption from traditional communications has grown 104% from 2018 to 2022 due in part to pandemic-related factors, but is expected to increase only 26.8% through 2027. Games represent another significant growth area, with data consumption associated with gaming projected to grow at a 21% compound annual growth rate (CAGR) from 2022 to 2027, driven by the shift towards online and cloud gaming. Virtual reality (VR), fueled by the expansion of the metaverse, is also on the rise, with an anticipated 43% CAGR in VR data consumption over the next five years, accounting for 5% of total data consumption by 2027.
Despite technological advancements and increasing competition, the price of data is declining, impacting internet access revenues which are expected to grow at a modest 4% CAGR to reach $921.6 billion by 2027 from $757.7 billion in 2022, closely tracking global GDP growth. Cellular data is forecasted to be the fastest-growing category, with a 27% CAGR from 2022 to 2027, driven by significant variations in data consumption patterns across regions. In North America, cellular data is projected to comprise 6% of all data traffic, compared to 30% in Asia, particularly influenced by developments in India where the rollout of 5G is expected to catalyze service innovation and subscriber growth, potentially reaching 300 million to 350 million 5G subscribers by 2026. Telecom giants such as Reliance Jio and Bharti Airtel are poised to capitalize on this opportunity by fostering a robust gaming ecosystem and expanding into sectors like healthcare.
10 Best Communication and Media Stocks To Buy According to Hedge Funds
Our Methodology
We leveraged Insider Monkey’s comprehensive database of 920 prominent hedge funds to identify the top 10 media and communications stocks with the highest level of hedge fund investment as of Q1 2024. These stocks are listed in order of increasing hedge fund ownership, providing insight into the most popular communication and media stocks among elite investors.
10. The New York Times Company (NYSE:NYT)
Number of Hedge Fund Holders: 42
Our list of 10 Best Communication and Media Stocks To Buy According to Hedge Funds starts with The New York Times Company (NYSE:NYT). In a recent development, The New York Times Company (NYSE:NYT), is reportedly planning to place its top podcasts behind a paywall, as per sources familiar with the matter. The company aims to generate new revenue from this format. The publisher is considering allowing nonsubscribers access to only the three most recent episodes of “The Daily” and making new episodes of “Serial” exclusive to subscribers for a limited time. These plans are still under development and may change. On June 13, Argus analyst Kristina Ruggeri increased the price target for The New York Times Company (NYSE:NYT) from $51.00 to $58.00 and reaffirmed a Buy rating. In its latest quarterly earnings announcement on May 8, the The New York Times Company (NYSE:NYT) reported a normalized earnings per share of $0.31, surpassing expectations by $0.11. Additionally, the company generated revenue of $594.02 million, exceeding forecasts by $2.24 million.
The number of hedge funds in Insider Monkey’s database owning stakes in The New York Times Company (NYSE:NYT) grew to 42 in Q1 2024, from 39 in the preceding quarter. The consolidated value of these stakes is nearly $1.79 billion. Among these hedge funds, Thomas Steyer’s Farallon Capital was the company’s leading stakeholder in Q1.
Artisan Partners made the following comment about The New York Times Company (NYSE:NYT) in its Q3 2022 investor letter:
“We ended our The New York Times Company (NYSE:NYT) and Ball Corporation investment campaigns during Q3. The New York Times is an iconic US news publisher with over eight million subscribers globally. The company continues to build a solid digital subscription business, led not only by the core news product but also by ancillary offerings such as cooking and games. We believe the company is the best positioned news publisher given its scale and digital capabilities. However, the company’s ability to deliver operating margin expansion has disappointed us given accelerating profit declines in the company’s legacy print business and investments to support its subscription growth strategy—namely, its recent dilutive acquisition of sports website The Athletic. Meanwhile, consumer and advertising spending have come under pressure amid the deteriorating global economy. Given these headwinds, we exited our position.”
09. Warner Bros. Discovery, Inc. (NASDAQ:WBD)
Number of Hedge Fund Holders: 55
On June 18, Warner Bros. Discovery announced the appointment of Robert Gibbs, former White House press secretary for President Barack Obama, as its new communications chief. In its latest quarterly earnings announcement on May 9, Warner Bros. Discovery, Inc. (NASDAQ:WBD) reported a normalized earnings per share of -$0.24, missing expectations by $0.07. The company recorded revenue of $9.96 billion, which was $265.78 million below forecasts. On June 25, Goldman Sachs began coverage of Warner Bros. Discovery, assigning a Neutral rating and setting a price target of $8.50. In the first quarter of 2024, there were 55 hedge funds holding positions in Warner Bros. Discovery, Inc. (NASDAQ:WBD), as compared to 56 in the previous quarter according to Insider Monkey’s database. The total value of these holdings is approximately $0.84 billion. Natixis Global Asset Management’s Harris Associates held the largest stake among these hedge funds during this period.
Bonhoeffer Capital Management stated the following regarding Warner Bros. Discovery, Inc. (NASDAQ:WBD) in its first quarter 2024 investor letter:
In remembrance of Charlie Munger, I listened to and read his investment speeches in Poor Charlie’s Almanac. His speech to the University of Southern California business school specifically dealt with the application of worldly wisdom to investment management and business. There were five ideas presented by Munger in that speech which are particularly relevant in the Bonhoeffer portfolio. First, over the long term, it’s hard for a stock to earn more than the underlying business earns. As an illustration of this principle, we examined two firms, Old Dominion Freight Line (ODFL) and Warner Bros. Discovery, Inc. (NASDAQ:WBD).
WBD is an example of a value stock whose value has been impaired by a declining intrinsic value over time. Historically, WBD has been consolidating media content and distribution firms. However, the media content and distribution industry has been fragmenting over the past 20 years, with many new competitors and lower barriers to entry. Based upon Morningstar’s estimates, WBD is almost always undervalued, but stock price declined by 13.4% per year less than intrinsic value which declined by 5% per year, which is still a disaster compared to the index which increased by 12.7% per year. The average RoE was 7.2% and was declining through the period and ended negative. The chart below shows both the stock and Morningstar’s estimate of its intrinsic value over time.
These trends of growth and their effects on returns are reflected in the new investments we have invested in and those firms we have sold recently. We have sold most of our telecom and media firms (which have had flat to declining intrinsic values over time). These firms have been replaced by consolidating capital light distribution firms and specialized financial services firms (which have had increased intrinsic value over time) one of which is described below.
08. Cisco Systems, Inc. (NASDAQ:CSCO)
Number of Hedge Fund Holders: 58
On June 4, Cisco Systems, Inc. (NASDAQ:CSCO) announced the launch of a $1 billion global investment fund aimed at expanding and developing secure, reliable, and trustworthy AI solutions. The company is making strategic investments in world-class startups across software and infrastructure, reinforcing Cisco Systems, Inc. (NASDAQ:CSCO) strategy to connect and protect the AI era. Among the initial generative AI startups joining the Cisco Investments portfolio are Cohere, Mistral AI, and Scale AI, all of which will contribute to building a broader AI ecosystem. In its latest quarterly earnings announcement on May 15, Cisco Systems, Inc. (NASDAQ:CSCO) reported a normalized earnings per share of $0.88, beating expectations by $0.06. The company posted actual revenue of $12.70 billion, exceeding forecasts by $79.01 million.
The number of hedge funds in Insider Monkey’s database owning stakes in Cisco Systems, Inc. (NASDAQ:CSCO) fell to 58 in Q1 2024, as compared to 60 in the preceding quarter. The consolidated value of these stakes is nearly $1.62 billion. Among these hedge funds, Cliff Asness’s AQR Capital Management was the company’s leading stakeholder in Q1.
Oakmark Fund made the following comment about Cisco Systems, Inc. (NASDAQ:CSCO) in its Q3 2023 investor letter:
“Cisco Systems, Inc. (NASDAQ:CSCO) is the leading networking solutions company. Networking equipment becomes more important as businesses modernize their IT infrastructure, and Cisco is well positioned to capture this demand given its broad portfolio and highly effective go-to-market strategy. Cisco is transitioning away from selling mainly transactional hardware and toward selling more software and subscriptions. This shift is expected to accelerate revenue growth, improve operating margins and build recurring revenue. Despite these notable business improvements, Cisco still trades near a trough valuation relative to the S&P 500 Index. More recently, Cisco announced its intention to acquire Splunk, a leader in security and observability, adding to its already strong position in the increasingly important security market. At a low-teens multiple of our estimate of normalized earnings, Cisco is trading comfortably below our estimate of intrinsic value.”
07. Comcast Corporation (NASDAQ:CMCSA)
Number of Hedge Fund Holders: 63
On June 25, Goldman Sachs initiated coverage on Comcast Corporation (NASDAQ:CMCSA) with a Buy rating and set a price target of $44.00. In its latest quarterly earnings report announced on April 25, 2024, Comcast Corporation (NASDAQ:CMCSA) exceeded expectations across key metrics. The company reported a normalized earnings per share of $1.04, surpassing estimates by $0.05. Comcast Corporation (NASDAQ:CMCSA) also achieved revenue of $30.06 billion, which exceeded forecasts by $204.92 million. In the first quarter of 2024, there were 63 hedge funds holding positions in Comcast Corporation (NASDAQ:CMCSA), consistent with the previous quarter according to Insider Monkey’s database. The total value of these holdings is approximately $3.43 billion. Jean-Marie Eveillard’s First Eagle Investment Management held the largest stake among these hedge funds during this period.
ClearBridge Large Cap Value Strategy made the following comment about Comcast Corporation (NASDAQ:CMCSA) in its Q3 2023 investor letter:
“Long-term holdings Charter and Comcast Corporation (NASDAQ:CMCSA) delivered strong second-quarter results relative to expectations; their stable recurring revenue streams and undemanding valuations were rewarded in the current environment. Cable multiples compressed over the past 24 months on fears of heightened competition in their core broadband business from fixed wireless and fiber providers. While fiber remains a competitive alternative to cable broadband over the long term, high upfront investments and a materially higher cost of capital are resulting in slower buildouts than previously expected. Fixed wireless also continues to gain traction, particularly in rural markets, but share gains also appear to be moderating. At the same time, both Comcast and Charter are expanding their footprints into rural and adjacent markets while gaining wireless market share, leveraging their mobile virtual network operator agreements with Verizon. We think both cable companies are well-positioned to continue to grow while generating substantial free cash flows. We added to Comcast during the quarter.”
06. Verizon Communications Inc. (NYSE:VZ)
Number of Hedge Fund Holders: 67
Verizon Communications Inc. (NYSE:VZ) announced on June 26 that it is introducing new programs and benefits to enhance customer options and business momentum. They’re refreshing their brand to reflect modern energy and vibrancy, rolling out across consumer, business, and network platforms. Key updates include myHome for simplified home internet and entertainment, a guaranteed phone trade-in program, and Verizon Access offering exclusive event access. Verizon Business is launching a smartphone management solution for business customers. These initiatives highlight Verizon Communications Inc. (NYSE:VZ) commitment to innovation and customer satisfaction, with a refreshed logo and creative approach capturing their impactful contributions. On May 17, Tigress Financial raised their target price on Verizon Communications Inc. (NYSE:VZ) shares from $50.00 to $52.00, alongside a “buy” rating for the stock.
During Q1, 2024 the count of hedge funds holding positions in Verizon Communications Inc. (NYSE:VZ) grew to 67 from 63 in the prior quarter, as reported by Insider Monkey’s database encompassing 920 hedge funds. These holdings collectively amount to around $2.16 billion. Ken Griffin’s Citadel Investment Group emerged as the leading shareholder among these hedge funds during this timeframe.
Ariel Global Fund stated the following regarding Verizon Communications Inc. (NYSE:VZ) in its fourth quarter 2023 investor letter:
“Global communications and technology leader, Verizon Communications Inc. (NYSE:VZ) also traded higher in the period following solid earnings results, highlighted by postpaid consumer net additions and an upward revision to free cash flow guidance. From a competitive and financial standpoint, we view Verizon to be among one of the best positioned telecoms in the world. The company’s solid long-term fundamentals are underscored by its predictable, recurring revenue streams and ~7% dividend yield. At current levels, Verizon is trading near an all-time low valuation presenting a compelling total return story for patient investors.”
05. T-Mobile US, Inc. (NASDAQ:TMUS)
Number of Hedge Fund Holders: 69
On June 13, T-Mobile US, Inc. (NASDAQ:TMUS) announced that T-Mobile Advertising Solutions has teamed up with Uber to expand Uber’s JourneyTV across over 50,000 rideshare vehicles nationwide. This partnership integrates T-Mobile’s Octopus Interactive network, offering advertisers a direct way to engage with Uber riders during their trips with personalized recommendations and relevant ads based on Uber’s data insights. This collaboration enhances the ride experience for both riders and advertisers, providing targeted campaign opportunities on T-Mobile US, Inc. (NASDAQ:TMUS) extensive rideshare network. On June 10, Bank of America increased their target price on T-Mobile US from $175.00 to $195.00 and assigned the company a “buy” rating.
In the first quarter of 2024, the number of hedge funds with stakes in T-Mobile US, Inc. (NASDAQ:TMUS) decreased to 69 from 75 in the previous quarter, according to Insider Monkey’s database of 920 hedge funds. The combined value of these stakes is approximately $3.09 billion. Warren Buffett’s Berkshire Hathaway emerged as the largest stakeholder among these hedge funds during this period.
ClearBridge Dividend Strategy made the following comment about T-Mobile US, Inc. (NASDAQ:TMUS) in its Q3 2023 investor letter:
“During the quarter we initiated positions in two new names: T-Mobile US, Inc. (NASDAQ:TMUS) and Gilead Sciences. T-Mobile is the best-in-class player in the wireless space, delivering the strongest growth with the lowest cost structure and the best consumer proposition. T-Mobile’s strength is rooted in its advantaged competitive position. Its superior spectrum holdings enable it to provide better wireless service at meaningfully lower cost. T-Mobile’s annual capital expenditures run about $10 billion, on the order of half the amount its peers must spend. Due to its lower cost structure, T-Mobile can undercut its competitors on price while still generating compelling profitability and returns.
This combination — superior service at lower prices — has enabled T-Mobile to outgrow its competition. In the three years since completing its merger with Sprint, T-Mobile has grown its post-paid subscriber base by about 22%. Over the same period, AT&T’s has grown by about 14%, while Verizon’s by less than 5%.
Given the high fixed-cost nature of the wireless business, these steady increases in revenue growth have led to outsize increases in profits and free cash flow. Free cash flow in 2023 is expected to come in around $13.5 billion, up from less than $8 billion last year. In 2024 free cash flow is expected to grow by over 20% to approximately $17 billion — providing a 10% yield based on today’s stock price.
We have long admired T-Mobile, but until recently the stock did not pay a dividend. The company announced its inaugural dividend in September, and we bought the stock shortly thereafter. The initial yield is about 2% and it is expected to grow about 10% per year.”
04. AT&T Inc. (NYSE:T)
Number of Hedge Fund Holders: 70
On June 11, BNP Paribas upgraded AT&T Inc. (NYSE:T) from an “underperform” rating to a “neutral” rating. In its latest quarterly earnings report announced on April 24, AT&T Inc. (NYSE:T) reported a normalized earnings per share of $0.55, surpassing expectations by $0.02. The company posted revenue of $30.03 billion, which missed forecasts by $498.06 million. In Q1 2024, the count of hedge funds holding stakes in AT&T Inc. (NYSE:T) rose to 70 from 66 in the previous quarter, based on Insider Monkey’s database of 920 hedge funds. These stakes collectively amount to around $2.91 billion in value. Steve Cohen’s Point72 Asset Management emerged as the largest stakeholder among these hedge funds during this period.
Miller Value Income Strategy made the following comment about AT&T Inc. (NYSE:T) in its Q3 2023 investor letter:
“Our third-largest holding at quarter end was AT&T Inc. (NYSE:T), a leading provider of communications and connectivity services in the US. At $15/share, the stock trades at the same price it did almost thirty years ago. The share price is much less interesting to us in relation to where it has traded in the past than in relation to how much cash the company generates and what management is doing with it. At just over 6x earnings, the stock trades near its lowest price-to-earnings (P/E) multiple ever, also representing close to its largest-ever P/E discount to the stock market. The business converts most of its earnings to free cash flow, implying a forward free cash flow yield north of 15%. Just under half of free cash flow is going toward the dividend (7.5% yield), while much of the balance is going to debt paydown. In other words, if the stock does not fall below its lowest-ever valuation, investors clip a rock-solid 7.5% in cash, while owning a growing portion of a very steady business as management reduces debt outstanding. A discounted cash flow model will suggest that intrinsic value for shares begins with a “2,” suggesting the stock is undervalued on an absolute basis. The lack of volatility in the underlying fundamentals also makes it unique when compared to many other things we own, which reduces the probability of permanent capital impairment and argues for a significant weight in the portfolio.
AT&T looks particularly attractive when compared to some of the larger names dominating the S&P 500. Compare the stock to Apple, for instance, whose revenues and profits are likely to shrink this year, even as it trades at 29x this year’s earnings estimate. The ongoing return to rationality and capital accountability, along with extreme valuations in the megacap tech stocks, have us more excited about our portfolio’s prospects than we can remember for quite some time. As always, we remain the largest investors and welcome any questions or comments.”
03. Spotify Technology S.A. (NYSE:SPOT)
Number of Hedge Fund Holders: 77
On June 11, Spotify Technology S.A. (NYSE:SPOT) announced that it is set to launch a new premium subscription tier later this year, aimed at its dedicated users. This plan will cost at least $5 more per month and will offer high-fidelity audio quality along with new tools for playlist creation and music library management. Existing Spotify users can opt to add this new tier to their current plan, potentially boosting revenue for the company and its partners. Pricing for the new tier will vary based on users’ existing plans, averaging around a 40% increase, according to sources familiar with the matter. This move follows earlier reports about Spotify’s internal project known as “Supremium.” On June 4, JP Morgan analyst Doug Anmuth increased the price target for Spotify Technology S.A. (NYSE:SPOT) from $365 to $375.
In the first quarter of 2024, the number of hedge funds with stakes in Spotify Technology S.A. (NYSE:SPOT) increased to 77 from 68 in the previous quarter, according to Insider Monkey’s database. The combined value of these stakes is approximately $4.04 billion. Rajiv Jain’s GQG Partners emerged as the largest stakeholder among these hedge funds during this period.
Baron Asset Fund stated the following regarding Spotify Technology S.A. (NYSE:SPOT) in its first quarter 2024 investor letter:
“Another new addition was Spotify Technology S.A. (NYSE:SPOT), a leading global digital music service, offering on-demand audio streaming through paid premium subscriptions and an ad-supported free option. Spotify was among the originators of paid streaming music after the downloads/Napster era, with the Spotify app launching broadly in the early 2010s. Since then, streaming music has grown at a 20%-plus CAGR, and Spotify has been the leading streaming music service both in the U.S. and globally, with more than 600 million monthly average users. We believe that Spotify offers a compelling user experience, which includes algorithmic recommendations and podcasts.
While we have monitored Spotify for some time because of its product leadership and large market opportunity, we believe the last few months have signaled a meaningful positive inflection point for the company. First, Spotify has continued to show that its market is far from penetrated – subscriber net adds accelerated in 2023, even as the product has been widely available for years, thanks to targeted marketing in various countries and new product features. Next, Spotify’s gross margin profile continues to improve thanks to the impact of its artist promotions marketplace, growth in its advertising business, and improved profitability in its podcast offerings.
In addition, management has recently become much more focused on operating discipline, with 2024 expected to be Spotify’s first meaningfully profitable year after operating losses in 2021 and 2022. This has entailed material staff layoffs, restructuring the podcast division, and hiring a new operationally focused CFO. Furthermore, Spotify increased its pricing structure while seeing minimal customer loss, demonstrating the pricing power in its product and the broader streaming music industry. Finally, Spotify has continued to innovate its product roadmap, introducing audiobooks and features like AI DJ that differentiate it from other music streaming providers. We believe that Spotify has the potential to reach more than 1 billion monthly active users, as its global market share increases and music listening habits mature internationally, and we expect its profitability to continue to improve.”
02. The Walt Disney Company (NYSE:DIS)
Number of Hedge Fund Holders: 92
The Walt Disney Company (NYSE:DIS) ranks second on our list of 10 best communication and media ttocks to buy according to hedge funds. On June 25, Goldman Sachs initiated coverage on The Walt Disney Company (NYSE:DIS), assigning a Buy rating to the entertainment powerhouse’s stock and setting a price target of $125 per share. Analysts at the firm highlight The Walt Disney Company (NYSE:DIS) robust content pipeline as a critical factor driving potential growth in the mid-term. In its latest quarterly earnings report announced on May 7, The Walt Disney Company (NYSE:DIS) reported a normalized earnings per share of $1.21, exceeding expectations by $0.11. The company posted revenue of $22.08 billion, which fell short of forecasts by $60.06 million.
During Q1, 2024 the count of hedge funds holding positions in The Walt Disney Company (NYSE:DIS) rose to 92 from 89 in the prior quarter, as reported by Insider Monkey’s database encompassing 920 hedge funds. These holdings collectively amount to around $8.45 billion. Nelson Peltz’s Trian Partners emerged as the leading shareholder among these hedge funds during this timeframe.
Mar Vista Focus strategy stated the following regarding The Walt Disney Company (NYSE:DIS) in its first quarter 2024 investor letter:
“The Walt Disney Company’s (NYSE:DIS) latest financial results displayed considerable progress, leading to an increase in stock price. The most noteworthy factor was the improved performance of its streaming business. With media profitability recovering, management is optimistically guiding for 20% earnings growth in 2024. This positive outlook is also supported by lower costs and robust performance from its parks division.
Walt Disney’s streaming service is on track to become profitable by its fiscal fourth quarter. This aligns with our original investment thesis, which expected the direct-to-consumer (DTC) business to move from a loss of $2 billion to a profit of $1 billion. Even after the recent stock price increase, Walt Disney remains undervalued relative to Netflix. We expect this gap to shrink as its streaming business matures and becomes increasingly profitable over the next few years.”
01. Netflix, Inc. (NASDAQ:NFLX)
Number of Hedge Fund Holders: 107
Topping our list of 10 best communication and media ttocks to buy according to hedge funds is Netflix, Inc. (NASDAQ:NFLX). In a recent development, Netflix, Inc. (NASDAQ:NFLX) has expanded its New Mexico production facility with four new soundstages, marking a significant increase in its film and television production capabilities in the state. Alongside the stages, the expansion includes three mills, a production office, two stage support buildings, and two backlot spaces across 108 acres near Albuquerque. The Los Gatos, Calif.-based entertainment company, which acquired ABQ Studios in 2018, has filmed popular series like “Stranger Things” and “The Harder They Fall” in the region. This expansion is part of Netflix, Inc. (NASDAQ:NFLX) larger project announced in 2020 to grow its New Mexico campus with 10 new stages, postproduction facilities, and infrastructure. Netflix co-chief executive Ted Sarandos emphasized New Mexico’s advantages as a production hub, citing landscapes, a skilled workforce, and community support. In its latest quarterly earnings report announced on April 18, Netflix, Inc. (NASDAQ:NFLX) reported a normalized earnings per share of $5.28, surpassing expectations by $0.74. The company posted revenue of $9.37 billion, which beat expectations by $91.63 million.
In the first quarter of 2024, the number of hedge funds with positions in Netflix, Inc. (NASDAQ:NFLX) rose to 107 from 89, according to Insider Monkey’s database, which tracks 920 hedge funds. The combined value of these holdings is approximately $13.31 billion. During this period, Ken Fisher’s Fisher Asset Management became the largest shareholder among these hedge funds.
RiverPark Large Growth Fund stated the following regarding Netflix, Inc. (NASDAQ:NFLX) in its first quarter 2024 investor letter:
“Netflix, Inc. (NASDAQ:NFLX): NFLX was a top contributor in 1Q24 following strong fourth quarter earnings and 2024 guidance driven by better-than-expected subscriber adds (+13.1 million versus estimates of +8.9 million). The company’s subscriber growth continued to accelerate following the company’s crack down on password sharing and the rollout of the lower cost, advertising supported subscriber offering known as the Ad Tier. ARPU came in below expectations, but recently announced price increases in the US, UK and France showed signs of moving ARPU higher. NFLX guided 2024 operating margins to 24%, ahead of prior guidance of 22-23%, and guided to 2024 free cash flow of $6 billion.
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%. We also believe that the stabilization of content spend should allow the company to continue to scale its FCF.”
While we acknowledge the potential of Netflix, Inc. (NASDAQ:NFLX) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than Netflix, Inc. (NASDAQ:NFLX) but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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