Bill Ackman Sells Entire Netflix Stake at a Loss of Around $400 Million
Bill Ackman sold his Netflix stake at a loss of around $400 million just months after acquiring the job, in the latest blow to the streaming company which saw its market value plummet on Wednesday following a decline in the number of subscribers.
Ackman’s decision to exit the world’s biggest streaming platform came three months after he amassed a stake worth $1.1 billion – making his Pershing Square vehicle one of the top 20 shareholders in Netflix – and pledged to focus on the “long-term horizon”.
Ackman’s decision capped a painful 24 hours for Netflix, which lost nearly 40% of its market value, a drop of nearly $60 billion, after revealing that its once meteoric subscriber growth had stalled. reversed.
The billionaire New York investor bought 3.1 million shares of Netflix in a matter of days in late January at around $360 per share. At the time, he said many of Pershing Square’s best investments had “emerged when other investors, with short-term time horizons, left big companies.” Netflix closed at $226.19 per share on Wednesday.
But in a letter to investors, Ackman said Pershing Square had “lost confidence in our ability to predict the future prospects of the business with a sufficient degree of certainty.” He cited planned changes to Netflix’s business model, such as launching an ad-supported service and cracking down on account sharing.
Pershing Square declined to comment.
Ackman said the loss on Netflix’s investment has translated into a 4 percentage point drop in Pershing Square fund returns this year, 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 fierce competition from Disney, Apple and Warner Media, which have spent billions of dollars to break into the streaming market pioneered by Netflix.
Ackman’s Netflix U-turn also came weeks after he said he would abandon the aggressive campaigning that has marked his investing career in favor of a more “cordial and constructive” approach.
In his letter announcing the Netflix stock sale on Wednesday, he wrote, “Based on management’s track record, we would not be surprised to see Netflix continue to be a very successful business and an excellent investment relative to its value. current merchant.”