Why Netflix is the Stock to Watch in a Slowdown: Insights from Extreme Investor Network
In an ever-shifting economic landscape, identifying stocks that can weather storms is crucial for investors. Recently, Josh Brown of Ritholtz Wealth Management made headlines by singling out Netflix (NFLX) as a top choice for resilience in the face of economic uncertainty. At Extreme Investor Network, we’re here to dig deeper into why Netflix stands out and how it might fit into your investment strategy moving forward.
The Case for Netflix
During a segment on CNBC’s "Halftime Report," Brown shared his belief that Netflix is not only performing well quantitatively but is also arguably the best stock to own in 2023. His rationale? Resilience is key in a defensive bear market. While other investors may be hunting for heavily discounted stocks, Brown focuses on companies that demonstrate strong fundamentals, especially during economic downturns.
A Defensive Play
Brown’s shift from Alphabet (Google’s parent company) to Netflix underscores his confidence in the streaming giant’s market positioning. As tariffs and trade tensions loom over the U.S. economy, the consensus among strategists leans toward an impending slowdown. However, Netflix has already proven its fortitude by showing a more than 10% increase in stock value this year, even as the S&P 500 has dipped more than 8%.
Strong Growth Prospects
One of the compelling reasons for Brown’s bullish stance on Netflix is based on recent insights from The Wall Street Journal. Reports reveal that Netflix executives are optimistic about future growth and are even planning to double their revenue by 2030, aiming for a staggering $1 trillion market capitalization—an achievement reserved for only a select few companies.
The New Normal: Ad-Supported Tier
In addition to its existing subscription model, Netflix’s lower-priced ad-supported tier is gaining traction. This strategy not only broadens its customer base but also enhances profitability. Interestingly, Brown notes that Netflix generates more revenue from this ad-supported tier compared to traditional premium subscriptions. In a landscape where consumers are increasingly price-conscious, this innovative approach may very well allow Netflix to retain customers who might otherwise consider cancellation.
Price vs. Value
Despite acknowledging that Netflix might not be the cheapest stock on the market—highlighting that Alphabet still offers a better price—Brown emphasizes that Netflix’s defensive qualities and potential upside are worth the premium. The argument here is that while price is essential, value-driven stocks that show resilience often outperform in the long run, especially during turbulent times.
Take Action with Extreme Investor Network
If you’ve been contemplating your next investment move, now is the perfect opportunity to consider Netflix as a part of your portfolio. At Extreme Investor Network, we continually strive to provide you with insights and tools to navigate the financial landscape. Whether it’s through our in-depth analysis, stock picks, or exclusive events like our upcoming CNBC Pro LIVE event at the New York Stock Exchange, we are committed to enhancing your investing journey.
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