Mega-investor Bill Ackman sells Netflix stake, loses $400 million

Billionaire Bill Ackman sold his stake in Netflix at a loss of approximately $400 million months after acquiring the position, in the latest blow to the streaming company that saw its market value plummet on Wednesday. after the disclosure of a loss in the number of subscribers in the first quarter of this year.

Ackman’s decision to exit the world’s biggest streaming platform comes three months after the investor amassed a stake worth $1.1 billion — making his management company, Pershing Square, one of the company’s top 20 shareholders. Netflix—and promised to focus on the “long-term horizon.”

Ackman’s move is yet another painful 24-hour chapter for Netflix, which has lost nearly 40% of its market value, a decline of nearly $60 billion, after it revealed its once-explosive subscriber growth had been reversed. .

Ackman bought 3.1 million shares of Netflix over a few days in January of this year, at about $360 a share. At the time, he said that many of Pershing Square’s best investments “came when other investors, whose time horizons are short-term, ruled out big companies.” Netflix closed at $226.19 a share on Wednesday.

But in a letter to investors, Ackman said Pershing Square “has lost confidence in our ability to predict the company’s future projections with a sufficient degree of certainty.” He cited planned changes to Netflix’s business model, such as launching a subscription plan with ads and cracking down on account sharing.

Pershing Square declined to comment.

Ackman said the loss on Netflix’s investment translated into a 4 percentage point drop in returns for this year’s Pershing Square Funds, leaving the funds down about 2% in total over the same period.

Netflix has lost two-thirds of its market value in the past six months, falling from a peak of nearly $310 billion in October to $100 billion on Wednesday.

The company has faced saturation in some of its markets, as well as stiff competition from companies like Disney, Apple and Warner Media, which have spent billions of dollars to break into the streaming market that Netflix pioneered.

Ackman’s Netflix turnaround also comes weeks after the investor said he would ditch the aggressive activist campaigns that were a hallmark of his investing career in favor of a more “cordial and constructive” approach.

In his letter announcing the sale of Netflix stock on Wednesday, he wrote: “Based on management’s track record, we would not be surprised to see Netflix continue to be a highly successful company and an excellent investment at its current market value. “.