Bill Ackman sells entire Netflix stake at roughly $400mn loss

Bill Ackman has sold his stake in Netflix at a roughly $400mn loss just months after acquiring the position, in the latest blow to the streaming company that saw its market value collapse on Wednesday following a decline in subscribers.

Ackman’s decision to exit the world’s largest streaming platform came three months after he amassed a stake worth $1.1bn — making his Pershing Square vehicle a top-20 shareholder in Netflix — and pledged to focus on the “long-term horizon”.

The move by Ackman capped a painful 24 hours for Netflix, which lost close to 40 per cent of its market value, a decline of almost $60bn, after it revealed that its once-blistering subscriber growth had gone into reverse.

The New York billionaire investor bought 3.1mn shares in Netflix over the course of a few days in late January at roughly $360 per share. At the time, he said many of Pershing Square’s best investments had “emerged when other investors, whose time horizons are short term, discard great companies”. Netflix closed at $226.19 a share on Wednesday.

But in a letter to investors, Ackman said Pershing Square had “lost confidence in our ability to predict the company’s future prospects with a sufficient degree of certainty”. He cited planned changes to Netflix’s business model such as launching an advertising-supported service and clamping down on account sharing.

Pershing Square declined to comment.

Ackman said the loss on the Netflix investment had translated to a 4 percentage point fall in returns for the Pershing Square Funds this year, leaving the funds down about 2 per cent overall over the same period.

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

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

Ackman’s U-turn on Netflix also came weeks after he said he would abandon the aggressive activist campaigns that were a hallmark of his investment career in favour of a more “cordial, constructive” approach.

In his letter announcing the Netflix share sale 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 from its current market value.”