Netflix (NFLX) Exit Signals Caution as Regulatory and Leverage Risks Mount

Polen Capital Management Llc released its "Polen Focus Growth Strategy" Q4 2025 investor letter. A copy of the letter can be downloaded here. In Q4 2025, the Polen Focus Growth strategy delivered a -1.37% gross return, underperforming the Russell 1000 Growth Index (+1.12%) and the S&P 500 (+2.66%), as concentrated mega‑cap leadership and AI valuation concerns drove market volatility. The fund faced headwinds from market rotation and valuation pressures but remained disciplined in its investment approach, focusing on companies with durable competitive advantages and diversified earnings. Portfolio adjustments were made to optimize long-term growth potential, and despite short-term challenges, the fund maintains a constructive medium- to long-term outlook, expecting broader market opportunities beyond narrow leadership trends to support balanced returns for investors. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its fourth-quarter 2025 investor letter, Polen Capital Management highlighted stocks like Netflix, Inc. (NASDAQ:NFLX). Netflix, Inc. (NASDAQ:NFLX) is a streaming entertainment firm. The one-month return of Netflix, Inc. (NASDAQ:NFLX) was -8.72% while its shares traded between $81.93 and $134.12 over the last 52 weeks. On January 27, 2026, Netflix, Inc. (NASDAQ:NFLX) stock closed at approximately $85.58 per share, with a market capitalization of about $361.33 billion.

Polen Capital Management stated the following regarding Netflix, Inc. (NASDAQ:NFLX) in its Polen Focus Growth Strategy's Q4 2025 investor letter:

"In Q4 2025, we initiated a new position in Intuitive Surgical and sold our positions in Netflix, Inc. (NASDAQ:NFLX) and Workday. We also sold our position in Netflix after the company agreed to acquire Warner Brothers (minus Discovery Global) for $83 billion. Even though the Warner Brothers content would assuredly strengthen Netflix’s content library and competitive differentiation, it would come with significant regulatory risk and balance sheet leverage above our comfort level."

Netflix, Inc. (NASDAQ:NFLX) is in 14th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 154 hedge fund portfolios held Netflix, Inc. (NASDAQ:NFLX) at the end of the third quarter, which was 133 in the previous quarter. While we acknowledge the risk and potential of Netflix, Inc. (NASDAQ:NFLX) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Netflix, Inc. (NASDAQ:NFLX) and shared the list of the best US stocks to buy and hold in 2026. In addition, please check out our hedge fund investor letters Q4 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.