Bill Ackman, founder of Pershing Square Capital Management, which bought $1.1 billion worth of Netflix stock three months ago, revealed on Wednesday that he sold his entire stake in the company at a huge loss.
“While we have great respect for Netflix’s management and the remarkable company they have built, given the enormous operating leverage inherent in the company’s business model, changes in the company’s future customer growth could greatly affect our assessment. “- Akman writes in a letter to shareholders of Pershing. “In our initial review, we viewed this operating leverage positively due to our long-term growth expectations for the company.
The move is the face of Akman, who made a major acquisition of the company in January and was lauded by Netflix Pershing in its March 29 annual report as a company that “is well positioned as the primary beneficiary of long-term secular growth in the industry.” streaming. . , a high quality business overseen by a world class management team. In the same report less than a month ago, Ackman added: “We believe that Netflix’s current valuation represents a significant discount for companies with exceptional quality and growth potential.
If Pershing had bought 3.1 million shares of Netflix stock at a closing price of $359.70 on Jan. 26 for $1.1 billion when the company closed at $226.19 on Wednesday, those shares would have been about $700 million.
The sale comes a day after Netflix announced it had lost 200,000 subscribers in the last quarter, bringing its total global membership to 221.64 million. Even more troubling for Wall Street was the indication that the streaming giant would lose another 2 million subscribers in the next quarter. “I know this is frustrating for investors and it really is,” CEO Reed Hastings told analysts in a phone call yesterday, adding, “We are very focused. [on] Let us return to the good mercy of our investors.”
As part of the return on investment, Netflix executives have revealed plans not only to stop sharing passwords, but also to eventually introduce a cheaper ad-supported service and continue to expand it into the video game space. Wall Street was shaky and Netflix shares fell 35 percent on Wednesday as many analysts reported a lower price target for the stock.
Akman in his letter praised Netflix’s efforts but said it wasn’t enough to keep the stock running. “While Netflix’s business is fundamentally simple, in light of recent events we have lost confidence in our ability to predict the company’s future prospects quite accurately,” the activist investor wrote on Wednesday. “Based on management experience, we are not surprised that Netflix remains a highly successful company and an excellent investment at its current market value.”
Source: Hollywood Reporter

Camila Luna is a writer at Gossipify, where she covers the latest movies and television series. With a passion for all things entertainment, Camila brings her unique perspective to her writing and offers readers an inside look at the industry. Camila is a graduate from the University of California, Los Angeles (UCLA) with a degree in English and is also a avid movie watcher.