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

Pershing Square Holdings, an investment holding company and alternative asset manager, released its second-quarter 2026 investor letter. The firm primarily manages capital through publicly traded investment vehicles, representing 98% of its capital structure, including Howard Hughes Holdings. This permanent capital supports long-term investments designed to build sustainable competitive advantages and generate substantial market returns since 2018. Pershing Square’s strategy focuses on acquiring high-quality companies at safe prices, with anticipated annual earnings-per-share growth of 15% or more in the coming years. Its top five holdings may provide additional insight into its preferred investments for 2026. The letter highlighted Netflix, Inc. (NASDAQ: NFLX), a leading subscription-based streaming entertainment platform. Netflix closed at $76.02 per share on August 17, 2026. Its one-month return was 10.70%, while the stock declined 37.39% over the preceding 52 weeks. The company had a market capitalization of $316.54 billion. Pershing Square said it acquired Netflix after briefly owning the company in 2022 and following it closely since then. It described Netflix as the dominant global streaming platform, with more than 325 million subscribers—nearly twice the combined base of its two closest competitors, Disney+ and HBO Max. When Pershing Square first invested in early 2022, investors feared an escalating content arms race among numerous streaming entrants. Cash content spending also substantially exceeded content amortization, weighing on free cash flow. The launch of a previously disavowed advertising tier added further uncertainty. Netflix ranked 13th among 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. At the end of the first quarter, 144 hedge fund portfolios held the stock, compared with 146 in the previous quarter. The source acknowledges Netflix’s potential but says certain artificial-intelligence stocks may offer greater upside with less downside risk. It also references Mar Vista U.S. Quality Strategy’s view on Netflix, an AI stock positioned to benefit from Trump-era tariffs and onshoring, and related lists of stocks with substantial long-term return potential.