Cathie Wood’s Ark Invest acquired over $17 million worth of Netflix shares last week, capitalizing on a sharp market sell-off that followed the streaming giant’s latest earnings report.
While Wood is primarily known for investing in high-growth stocks like Tesla and Nvidia, this move saw her firm purchase shares of Netflix after the price plummeted 10% in a single day. The acquisition was for the Ark Next Generation Internet ETF, which focuses on companies benefiting from disruptive technologies such as cloud computing and big data.
The market’s negative reaction was triggered by Netflix’s third-quarter results, which fell short of Wall Street’s expectations. The company reported earnings of $5.87 per share, missing the consensus estimate of $6.97. Additionally, its operating margin of 28% was below the anticipated 31%, and its fourth-quarter revenue growth forecast of 16.7% suggested a potential deceleration from the previous quarter. The stock is now down nearly 18% from its all-time high set on June 30.
However, Ark Invest appears to have looked past the headline numbers. The earnings miss was largely attributable to a one-time $619 million charge to resolve a tax dispute in Brazil. Without this unusual expense, the company’s financial performance would have appeared significantly stronger.
Ark’s decision also likely reflects confidence in Netflix’s emerging revenue streams. The company’s ad-supported subscription tier, launched in 2022, is gaining significant traction. Co-CEO Greg Peters stated that advertising revenue is on track to double in 2025 compared to 2024, with an accelerating rate of corporate ad deals. Despite other concerns, overall third-quarter revenue still grew by a healthy 17% to $11.5 billion.
While some investors remain cautious of Netflix’s high valuation—trading at a forward price-to-earnings ratio of around 47—such metrics are not typically a deterrent for Ark Invest, which maintains a long-term investment horizon of seven years or more. By acquiring shares as the market retreated, Wood is making a calculated bet that Netflix’s innovation and new growth drivers will outweigh the short-term concerns that prompted last week’s sell-off.
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