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Exploring Opportunities: Three Prominent Founder-Run Companies
An updated edition of the March 10, 2025, article.
Founders are uniquely positioned to shape their companies, much like a devoted parent does for a child. They invest immense energy and vision into their ventures, taking on substantial risks to drive innovation and success. This passion often results in businesses reflective of their founders’ core values. Despite representing less than 5% of the S&P 500 index, founder-run companies have made significant contributions to the market.
Well-known founder-owners, including Elon Musk, Warren Buffett, Steve Jobs, Jeff Bezos, Mark Zuckerberg, and Bill Gates, have redefined industries and created trillion-dollar enterprises. Today’s notable founder-led companies include NVIDIA Corporation (NVDA), Amazon (AMZN), Meta (META), Tesla, Inc. (TSLA), Berkshire Hathaway Inc. (BRK.B), and Netflix (NFLX). These firms account for nearly 15% of the total market capitalization of the index, with a significant presence in the technology sector.
Founded on unique ideas, these companies often leverage technological innovations to address challenges and ensure long-term sustainability. Initially, founders may struggle to secure funding, frequently investing personal wealth to bootstrap their ventures. Success can attract angel investors or other funding sources, but founder-owners typically maintain the highest stakes and associated risks.
Additionally, founder-owners often hesitate to delegate responsibilities, leading to multiple leadership roles within their companies. This reluctance can cause them to miss out on the benefits of professional expertise essential for growth.
Research indicates that founder-led companies consistently outperform others over time. A study by the Harvard Business Review reveals that these firms achieved a market-adjusted return of 12% over three years, compared to a staggering negative 26% for companies with hired CEOs. Our screening tool for founder-run companies also highlights promising stocks, such as Netflix, Intercontinental Exchange (ICE), and Affirm Holdings (AFRM).
Three Founder-Run Companies to Consider for Your Portfolio
First on the list is Netflix, which boasts a market capitalization of $387.7 billion. Initially a DVD rental service, Netflix has transformed into a powerhouse in the streaming industry, thanks to its diverse content and strong global presence. Co-founded in 1997 by Wilmot Reed Hastings Jr. and Marc Randolph, Hastings serves as the executive chairman today.
Netflix has aggressively invested in original programming to maintain its market leadership despite increased competition from Disney+, Apple TV+, and others. With a Zacks Rank of #2 (Buy), Netflix is focusing on expanding its regional content offerings to drive international growth. The company is diversifying its portfolio in countries like India, Mexico, Spain, and Brazil, and launching low-cost mobile plans to reach price-sensitive consumers. Its future initiatives include enhancing its core streaming service and expanding its advertising and gaming divisions, projecting revenues between $43.5 billion and $44.5 billion in 2025 with an operating margin of 29%.
Next, Intercontinental Exchange, with a market capitalization of $95.6 billion, has transitioned from a startup less than 30 years ago to a leader in data and workflow solutions for its clients. Jeffrey C. Sprecher, the founder, chairman, and CEO, emphasized the company’s consistent achievement of record net revenues for 19 consecutive years since going public. Their growth has been driven through strategic acquisitions and collaborations, facilitating operational efficiencies.
The company excels in digitizing fixed income workflows and automating mortgage processes. With over 5,000 indices managing more than $1 trillion in assets, ICE ranks as the second-largest global fixed income provider. Its well-positioned strategy leverages the ongoing digital transformation within the U.S. residential mortgage industry, enhancing its existing mortgage network by integrating Ellie Mae into ICE Mortgage Technology. This foundation provides stability and opportunities for strategic investments.
Finally, Affirm, valued at $16.3 billion, is a significant player in the buy-now-pay-later (BNPL) market. Partnering with over 337,000 active merchants as of December 31, 2024, it integrates pay-over-time solutions at the point of sale. Max Levchin, founder and CEO, asserts the company is in its strongest position yet.
Affirm’s growth stems from increased merchant partnerships and innovative technology that powers its data-driven payment platform. Utilizing advanced machine learning allows Affirm to conduct risk assessments effectively. With access to data from 215 million loans, Affirm customizes its services for improved customer experience while managing risk.
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Affirm’s Strategic Growth: GAAP Profitability and International Expansion
Affirm is evolving into a comprehensive financial services platform. This diversification strategy broadens its addressable market and establishes new revenue channels. Recently, the company announced achieving GAAP profitability in the last quarter. Affirm aims to sustain this profitability beginning in the fourth quarter of fiscal 2025. Additionally, the Zacks Rank #1 company is targeting international growth, with plans to launch operations in Australia and Western Europe.
Top Stock Picks with Significant Growth Potential
Five financial experts from Zacks have identified their top stock picks that could potentially skyrocket by over 100% in the coming months. Among these selections, Director of Research Sheraz Mian believes one stock stands out as having the most explosive growth potential.
This stock primarily targets millennial and Gen Z consumers, reporting nearly $1 billion in revenue in the last quarter. A recent market pullback presents an advantageous opportunity for new investors. Although not every pick may lead to success, this particular stock has the potential to surpass previous Zacks’ recommendations, such as Nano-X Imaging, which surged by 129.6% in just over nine months.
Interested investors can explore the latest recommendations from Zacks Investment Research, including a downloadable report on the 7 Best Stocks for the Next 30 Days.
In addition to Affirm Holdings, Inc. (AFRM), notable stock analysis reports are available for the following companies:
- Amazon.com, Inc. (AMZN)
- Intercontinental Exchange Inc. (ICE)
- Netflix, Inc. (NFLX)
- NVIDIA Corporation (NVDA)
- Tesla, Inc. (TSLA)
- Meta Platforms, Inc. (META)
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
