10 Most Profitable NASDAQ Stocks To Invest In

2. Netflix Inc. (NASDAQ:NFLX)

TTM Net Income: $7.1 billion

5-Year Net Income CAGR: 43.86%

Number of Hedge Fund Holders: 103  

Netflix Inc. (NASDAQ:NFLX) is a subscription video-on-demand over-the-top streaming service, primarily distributing original and acquired films and television shows from various genres. It is available internationally in multiple languages and is known for its innovative approach to content creation and distribution.

It’s a top-performing stock due to its pioneering role in online streaming. The company’s massive and growing subscriber base drives significant revenue growth. It added 8 million new subscribers in the second quarter of 2024, bringing its total paid memberships to 277.65 million. It achieved record UK revenues in 2023, primarily driven by increased subscriber numbers following its crackdown on password sharing.

While it has historically focused on subscription revenue, its recent push into advertising has solidified its position as a strong investment. Q2 2024 revenue increased 16.76% year-over-year to $9.56 billion, and net income grew to $2.1 billion. Netflix Inc. (NASDAQ:NFLX) earned $4.88 per share in the second quarter. It has secured a significant increase in upfront advertising commitments, raised ad prices, and restricted ad frequency to maintain quality. To further enhance advertising revenue, it plans to phase out its ad-free basic plan in the US and France.

Netflix Inc. (NASDAQ:NFLX) is a leader with its vast library of original content, strategic pricing, and focus on popular content. Its expansion into gaming and live sports streaming further diversifies its revenue and enhances customer engagement. Its international expansion and the ability to adapt to changing consumer preferences position it for continued growth and success.

Polen Focus Growth Strategy stated the following regarding Netflix, Inc. (NASDAQ:NFLX) in its Q2 2024 investor letter:

“Finally, we trimmed Netflix, Inc. (NASDAQ:NFLX) mostly due to valuation but also as a source of funds to add to the new position in Shopify. As a reminder, we added to our position in August 2022 amid broad concerns about the company’s ability to grow and monetize shared passwords. We expected Netflix to show progress in monetizing shared passwords, leading to robust free cash flow generation. This is now playing out and is appreciated by the market. Hence, given the balance of growth and valuation, we felt it was appropriate to reduce our exposure to a more normal weight.”