1. Netflix Inc. (NASDAQ:NFLX)
Share Price as of March 17: $918.00
Surge in Share Price in 5 Years: 175.82%
Stock Split Confirmed: No
Number of Hedge Fund Holders: 144
Netflix Inc. (NASDAQ:NFLX) is a global entertainment streaming service. It operates in about 190 countries and offers a diverse library of TV series, documentaries, feature films, and games. These are accessible across various internet-connected devices.
The company’s subscriber growth is its primary revenue driver. It added 19 million subscribers in Q4 2024. This growth was from big events, as well as from a range of content across all regions. The majority of new subscribers came from the company’s diverse content library, not single titles. It focuses on original series, films, live sports, and games. Live sports, like NFL games, drew 30-31 million viewers, and WWE Raw had 5 million views in its first week. It’s also expanding into games, with titles like “Squid Game: Unleashed” becoming top downloads.
Netflix Inc. (NASDAQ:NFLX) offers ad-supported plans, which now account for over 55% of sign-ups in ad-supported regions. Ad revenue is growing and is expected to double this year again after doubling last year. The company is investing in ad tech and games to boost growth. Game downloads have increased, and the company sees positive effects on acquisition and retention, though currently small. The aim is to keep growing with a focus on diverse content and new revenue streams.
The company’s strong earnings, subscriber growth driven by new initiatives, and optimistic future projections position it for continued success. RiverPark Large Growth Fund stated the following regarding Netflix Inc. (NASDAQ:NFLX) in its Q4 2024 investor letter:
“Netflix, Inc. (NASDAQ:NFLX): NFLX was a top contributor in the fourth quarter powered by a 3Q earnings report that included stronger-than-expected revenue and operating income, solid subscriber additions, and positive forward commentary. Anti-password sharing and ad tier initiatives continue to drive subscriber growth while improving revenue per user trends, from recent price increases, drive margin expansion. The company was optimistic about future revenue growth, margin expansion, free cash flow generation and future return of capital programs.
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 operating margin to more than 25%. We also believe that the stabilization of content spend should allow the company to continue to scale its free cash flow.”
While we acknowledge the growth potential of Netflix Inc. (NASDAQ:NFLX), our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NFLX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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