Jim Cramer on Taiwan Semiconductor, Netflix, and Other Stocks

2. Netflix, Inc. (NASDAQ:NFLX)

Number of Hedge Fund Holders: 103

Jim Cramer called Netflix, Inc. (NASDAQ:NFLX) “pretty good” and said that it is one of the companies whose performance is tied to its executives’ strategies. He commented, “Tonight we got excellent numbers from Netflix. They have that advertising tier, of course, it’s working”.

On October 17, Netflix (NASDAQ:NFLX) unveiled its financial results for the third quarter, showing strong performance despite some ongoing challenges in maintaining membership growth and monetizing its ad-supported tier effectively. During this quarter, the company experienced a 15% increase in revenue compared to the same period last year, coupled with the addition of over 5 million new subscribers. The operating margin reached 29.6%, an improvement from 23% a year prior, which points to its effective cost management strategies. Additionally, net income saw a significant jump of 41%, which translated to diluted EPS of $5.40, marking a 45% increase year over year.

The revenue surge was largely fueled by new memberships in international markets, alongside the improvement of operating margins. There was a 35% quarter-on-quarter growth in the ad-supported tier’s memberships, even as Netflix (NASDAQ:NFLX) navigated some difficulties in ad monetization. The company has acknowledged these challenges and is actively investing in technology aimed at improving its advertising capabilities.

For the fourth quarter, management projects a 14.7% increase in revenue year-over-year, alongside a target operating margin of 21.6%. Additionally, projections for 2025 show expected annual revenue between $43 billion and $44 billion, driven by ongoing membership growth and increases in average revenue per subscriber.