Alger Focus Equity Fund on Netflix, Inc.
Thesis
Alger views Netflix as a compelling investment because it can sustain strong engagement at scale, exercise pricing power and expand into new revenue streams such as advertising and live events. The company remains the global leader in streaming entertainment and has broadened its platform with an advertising-supported tier and selective live programming. Shares weakened despite a first-quarter revenue beat because of content-cost timing, the decision to abandon a large proposed acquisition and the planned departure of its co-founder and longtime chairman from the board.
“We find Netflix to be a compelling investment for its ability to sustain strong engagement at scale, its pricing power”
Key risks
- Timing of content costs
- Execution after walking away from a large proposed acquisition
- Board leadership transition