1. Netflix, Inc. (NASDAQ:NFLX)
Number of Hedge Fun Holders: 103
Netflix, Inc. (NASDAQ:NFLX) is a global streaming entertainment service with 283 million paid memberships in more than 190 countries enjoying TV series, films, and games across various genres and languages. Netflix started its journey in 1997 as a DVD-rental-by-mail firm and began streaming in the US in 2007 and internationally in 2010 while it became global in 2016.
With streaming entertainment replacing the linear TV experience potentially for an enduring period, Netflix expects to be one of the leading firms of the streaming entertainment era. The firm has been at a scale where it can economically create original content for Netflix since 2013 thereby reaping the benefits of originals. Netflix, Inc. (NASDAQ:NFLX) has a major advantage over its linear competitors as its shows don’t compete for scarce prime-time slots like on linear TV. Furthermore, the reach is vast with Netflix being virtually everywhere except for Russia and China.
In the third quarter, revenue grew 15% year-over-year. The firm delivered multiple hits in the quarter including The Perfect Couple, Nobody Wants This, Emily in Paris, and CobraKai. Engagement remains strong with view hours per member amongst owner households increasing year-over-year through the first three quarters of 2024. Netflix is simultaneously improving its advertising business, with ads membership up 35% quarter-on-quarter and ad-tech platform set to launch in Canada in Q4 and more broadly in 2025.
Netflix is well-positioned to bring engaging stories from many cultures to people globally with its global distribution. The firm is all set to benefit from the universal appeal for high-quality storytelling that transcends borders amidst the growing ubiquity of the internet. The firm remains excited about its Q4 slate including Squid Game S2, the Jake Paul/Mike Tyson fight, and two NFL games on Christmas Day. With a steady drumbeat of hit titles from countries globally, healthy member engagement, and a large strong core business, Netflix, Inc. (NASDAQ:NFLX) is poised for growth.
While we acknowledge the potential of NFLX as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued 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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