Bill Ackman's Pershing Square Re-Enters Netflix Investment After Previous Loss
In early 2022, Bill Ackman’s hedge fund, Pershing Square, invested $1.25 billion in Netflix but sold the position shortly after due to a strategic shift by the company and concerns over predictability of future earnings. The decision was based on Netflix's announcement of an ad-supported subscription tier, which complicated its business model for Ackman. Four years later, Pershing Square has re-entered with another $1 billion investment in Netflix. Ackman now believes that Netflix’s long-term potential is stronger than before due to the company winning the streaming wars and expanding into live programming through advertising. Free cash flow growth has also exceeded expectations, reaching about 90% of earnings by 2026. Ackman expects continued margin expansion and share repurchases will drive EPS growth close to his original target. The re-entry comes as Netflix’s stock valuation returns to levels seen in early 2022, offering a more favorable entry point for the investor.
