On Wednesday, billionaire investor William Ackman sold a $1.1 billion bet on Netflix, netting a loss of more than $400 million as the streaming service’s price plummeted after news that it had lost members for the first time in a decade.
As Netflix’s stock fell 35 percent to $226.19, Ackman’s hedge fund Pershing Square Capital Management did a dramatic U-turn, dumping the 3.1 million shares it had bought just three months before.
The investor poured over $1 billion into the streaming service in January, just days after a dismal subscription prediction knocked the stock lower. Now, a second round of bad news concerning subscribers – the company announced it had lost 200,000 – has forced the fund manager to abandon a company he had praised only weeks before.
Ackman said proposed business model changes, such as introducing advertising and going after non-paying consumers, made sense but would make the company too unpredictable in the short term, in a brief statement announcing the move.
‘While Netflix’s business is essentially simple to comprehend, we have lost faith in our ability to accurately forecast the company’s future prospects in light of recent developments.’
Post Your Comments