3. Netflix, Inc. (NASDAQ:NFLX)
Number of Hedge Fund Holders: 115
Netflix, Inc. (NASDAQ:NFLX) saw 16 million new accounts in the first three months of 2020 as people suffered through lockdowns, and this was almost double the new sign-ups the company experienced in the last three months of 2019. Netflix, Inc. (NASDAQ:NFLX) is one of the premier COVID stocks to invest in.
BofA analyst Jessica Reif Ehrlich on November 15 reinstated coverage of Netflix, Inc. (NASDAQ:NFLX) with a Buy rating and a $370 price target, reflecting 24% upside potential. Netflix, Inc. (NASDAQ:NFLX) is still the streaming leader, the analyst told investors. Her valuation factors in the company’s strong position within the “still burgeoning” shift towards non-linear video viewing, a “strong runway” for subscriber growth outside the U.S., and upside from advertising video on demand. The analyst views Netflix, Inc. (NASDAQ:NFLX)’s risk/reward positively.
According to Insider Monkey’s third quarter data, 115 hedge funds were bullish on Netflix, Inc. (NASDAQ:NFLX), compared to 95 funds in the earlier quarter. Boykin Curry’s Eagle Capital Management is one of the largest stakeholders of the company, with 5.5 million shares worth $1.30 billion.
Artisan Partners made the following comment about Netflix, Inc. (NASDAQ:NFLX) in its Q3 2022 investor letter:
“Netflix, Inc. (NASDAQ:NFLX) and Vertex Pharmaceuticals were two of our top contributors. Shares of Netflix got some relief after being under pressure in the first half of 2022. Media and entertainment stocks in general have been out of favor as investors grapple with the long-term economics of streaming services and slowing subscriber growth—what should be viewed as a normal feature of a maturing market. Our view is streaming is a scale and intellectual property business that will result in a few large winners, and we believe Netflix will be among this group. We initiated our position in Netflix in Q1 after shares fell by more than half due to concerns about subscriber growth and increasing competition from streaming upstarts. The stock then suffered a second down leg in April after the company reported subscriber losses for the first time in its history. Then in July, the company reported its second consecutive quarter of subscriber losses, but the nearly 1 million subscribers lost were much lower than the 2 million that management had forecast, and shares rallied on the news. For patient investors, there is reason for optimism that subscriber growth will turn around. The company has plans to crack down on password sharing and is launching a lower cost advertising supported tier. Our investment case is focused on an undemanding valuation, massive scale, a continued shift in time and attention from linear TV to streaming, and a financial condition which gives management the flexibility to operate unconstrained during a transition period for the business. We also believe Netflix can leverage its massive global scale of 200+ million subscribers into positive free cash flow through steady pricing increases and content spending controls.”
