Billionaire Bill Ackman sells Netflix stock after $600m loss
One of the world’s richest hedge fund investors, Bill Ackman, told his shareholders that even though Netflix lost almost $600 million in three months, he decided to sell his fund’s share of the company, even though he didn’t like it.
Recently, Netflix’s stock has fallen after an earnings report said that 200,000 subscribers had left the streaming service, which was a record for the first time in more than a decade.
It was in late January this year that Bill Ackman’s company, Pershing Square Capital Management, became one of Netflix’s largest shareholders. Netflix’s stock price at the time and how much money Pershing Square lost on the deal are used to figure out how much money they lost. In a letter to shareholders, Mr. Ackman said that while the hedge fund has a “high regard” for Netflix’s management, they can no longer be sure that the company will grow for a long time now.
Today, Netflix announced that it would change its subscription-only model in response to continued customer subscriber growth. “Netflix will be more aggressive in pursuing customers who don’t pay, and will start incorporating advertising, which will take one to two years to implement,” said Bill Ackman.
When it comes to the company’s long-term subscriber growth, revenue, operating margins, and capital intensity, it is very hard to predict how these business model changes will affect these things.
It wouldn’t be surprising if Netflix became more successful, but the fund had learned that it was important to act quickly in the past with other investments.
Learning from mistakes we’ve made in the past is to act quickly when we find new information about an investment that doesn’t line up with what we thought.” That’s why we did it here, he said.
Because of recent events, we have lost faith in our ability to predict Netflix’s future with enough certainty. Netflix’s business model is simple to understand.
If Netflix keeps going the way it has, we wouldn’t be surprised if it kept being a very profitable company and a good investment from its current value.
It was last week when Netflix’s stock dropped 30% when the market opened on Wednesday. This took more than $60.54 billion off the value of the company right away.
This is what Netflix said: It lost 200,000 subscribers in the first three months of the year when it had hoped to add 2.5 million.
The streaming company, whose stock had already dropped more than 40% this year-to-date, blamed the drop on more competition for viewers and Russia’s invasion of Ukraine for the loss.
In a statement, Netflix said that its decision to leave Russia cost the company 700,000 subscribers.