Double Digit Revenue and Margin Expansion Drive Netflix’s (NFLX) Upside

Double Digit Revenue and Margin Expansion Drive Netflix’s (NFLX) Upside

Tue, August 18, 2026 at 4:10 PM GMT+3 2 min read

Pershing Square Holdings, an investment holding company, released its second quarter 2026 investor letter. A copy of the letter can be downloaded here. Pershing Square is an alternative asset manager that primarily manages capital in publicly traded investment vehicles, with 98% of its capital structure dedicated to such assets, including Howard Hughes Holdings. This capital permanency allows for long-term investments, fostering sustainable competitive advantages and yielding substantial market returns since 2018. The investment strategy focuses on acquiring high-quality companies at safe price points, anticipating significant annual EPS growth of 15% or more in the coming years. Additionally, reviewing the Fund's top five holdings could help identify its best picks for 2026.

In its Q2 2026 investor letter, Pershing Square Holdings highlighted Netflix, Inc. (NASDAQ:NFLX). Netflix, Inc. (NASDAQ:NFLX) is a leading subscription-based streaming entertainment platform. On August 17, 2026, Netflix, Inc. (NASDAQ:NFLX) closed at $76.02 per share. The one-month return of Netflix, Inc. (NASDAQ:NFLX) was 10.70% and its shares lost 37.39% over the past 52 weeks. Netflix, Inc. (NASDAQ:NFLX) has a market capitalization of $316.54 billion.

Pershing Square Holdings stated the following regarding Netflix, Inc. (NASDAQ:NFLX) in its Q2 2026 investor letter:

"We acquired a position in Netflix, a business we briefly owned in 2022 and have followed closely ever since. Netflix is the dominant global streaming platform with over 325 million subscribers, nearly double the combined base of its two closest competitors, Disney+ and HBO Max. When we first invested in early 2022, investors feared an escalating content arms race among a crowded field of streaming entrants. At the same time, cash content spend substantially exceeded content amortization, weighing on free cash flow. The launch of a previously disavowed advertising tier added further uncertainty…" (Click here to read the full text)

Netflix, Inc. (NASDAQ:NFLX) ranks 13 on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 144 hedge fund portfolios held Netflix, Inc. (NASDAQ:NFLX) at the end of the first quarter, compared to 146 in the previous quarter. While we acknowledge the potential of Netflix, Inc. (NASDAQ:NFLX) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on thebest short-term AI stock.

In another article, we covered Netflix, Inc. (NASDAQ:NFLX) and shared Mar Vista U.S. Quality Strategy's insight on the company. In addition, please check out our hedge fund investor letters Q2 2026 page for more investor letters from hedge funds and other leading investors.

READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years.

Disclosure: None. This article is originally published at Insider Monkey.