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One of the most iconic faces of the meme stock revolution has been placing more conservative bets lately. Ryan Cohen is famous for his stake in GameStop (NYSE:GME), which resulted in him becoming Chairman of the company. But lately, the man hailed as the “meme stock king” has been focused on different names. The Wall Street Journal reports that Cohen holds positions in Netflix (NASDAQ:NFLX) and Citigroup (NYSE:C).
While Citi has performed well throughout 2022, NFLX stock has struggled greatly only to rebound in the third quarter. However, Cohen has revealed that he is building a passive stake in the streaming giant because he considers it to be undervalued.
What does this mean for Netflix and Cohen’s other investments? Let’s take a closer look at what investors can expect.
What’s Happening With NFLX Stock?
It has been a turbulent week for Netflix and it isn’t over yet. Shares began today by dropping and, while they have since rebounded, growth appears to have lost momentum. As of this writing, NFLX stock is down roughly 1%. News of Cohen’s stake in the company hasn’t boosted shares so far, but that is likely more of a reflection on the investor himself than on Netflix.
The clear takeaway from this news is that Cohen is no longer the “meme stock king” he once was. Until August 2022, the Reddit r/WallStreetBets crowd would have followed him into virtually any trade. But when Cohen cashed out of his Bed Bath and Beyond (NASDAQ:BBBY) stake earlier this year, it sent the summer’s meme stock sensation straight to the bottom. Since then, BBBY stock hasn’t recovered and plenty of amateur traders still blame Cohen for tanking their investments. This has resulted in the activist investing icon losing his status as a leader amongst small-time investors who want to bet against Wall Street.
Does this mean that Netflix is still a profitable investment? There’s plenty of evidence to suggest that Cohen is correct in his assessment. NFLX stock has been highly turbulent as it has battled macroeconomic headwinds throughout 2022. However, the streaming giant seems to be turning around. InvestorPlace contributor Ian Bezek reports:
“NFLX stock jumped 12% earlier this month following its much better-than-expected Q3 earnings report. Not only did its revenues and earnings both top […] expectations, but the company’s subscriber base increased.”
Wall Street remains fairly divided on NFLX, but plenty of experts agree with Cohen. The analyst rating consensus on TipRanks rates shares as a “moderate buy,” with 14 analysts issuing “buy” ratings and another 14 analysts issuing “hold” ratings. Only two analysts still rate the stock as a “sell.”
The Bottom Line
Meme stock traders likely won’t be piling into Netflix now, but that doesn’t mean other investors will ignore it. There’s a strong case that the stock is an undervalued play on a growing sector.
One of the Netflix’s chief competitors, Roku (NASDAQ:ROKU), recently disappointed Wall Street by issuing weak guidance. This could bode well for NFLX stock as the company looks to expand its market share and reclaim its position at the top of the streaming industry.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Samuel O’Brient has been covering financial markets and analyzing economic policy for three-plus years. His areas of expertise involve electric vehicle (EV) stocks, green energy and NFTs. O’Brient loves helping everyone understand the complexities of economics. He is ranked in the top 15% of stock pickers on TipRanks.