Billionaire William Ackman Sells 3.1 Million Netflix Shares At $400 Million Loss

A day after Netflix shares tumbled upon reports of the streaming service company losing 2 lakh subscribers and nearly a quarter of its value, billionaire investor William Ackman liquidated a $1.1 billion investment on Netflix yesterday, locking in a loss of more than $400 million, as per Reuters.

As Netflix¡¯s shares reportedly tumbled 35%, American investor Ackman¡¯s hedge fund Pershing Square Capital Management made an abrupt U-turn and sold 3.1 million shares it had bought just about three months ago.

In January 2022, the investor had put in over $1 billion into the streaming service just days after a disappointing forecast for subscriptions pushed the share price lower.

Now, this second bout of negative news about losing subscribers for the first time in a decade prompted the fund manager to turn his back on a company he had showered with praise only a few weeks ago.

CNBC

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Statement By The Billionaire

In a brief statement announcing the move, Billionaire Ackman said proposed business model changes, including incorporating advertising and going after non-paying customers, made sense but would make the company too unpredictable in the short term.

He wrote "While Netflix's business is fundamentally simple to understand, in light of recent events, we have lost confidence in our ability to predict the company's future prospects with a sufficient degree of certainty," as per Reuters

His hedge fund Pershing Square reportedly buys shares in only about a dozen companies at a time and needs a "high degree of predictability" in its portfolio companies, the billionaire said.

With this recent U-turn, Ackman showed that he did not wait around for things to improve at Netflix, and instead locked in losses that are calculated to be more than $400 million, people familiar with the portfolio said.

As per Netflix, its decision in early March 2022 to suspend service in Russia after it invaded Ukraine is to be blamed for the loss in value and subscribers.

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