Ackman returns to Netflix: Betting on the streaming giant after a massive loss
Four years after writing off an investment of more than $400 million, Bill Ackman is returning to Netflix, convinced that the company has won the streaming war. He believes the company's current valuation reflects a significant discount.
Bill Ackman, one of the most prominent investors on Wall Street, has made a series of new investments in recent weeks. These were revealed in a letter to shareholders attached to the quarterly reports of Pershing Square Holdings, the public investment arm managed by the investment firm Pershing Square.
These were the first reports published since the company went public in April. Among the six new companies added to the portfolio are Visa, Mastercard, S&P Global, Intercontinental Exchange, and Alcon, but the most intriguing investment is undoubtedly Netflix.
Learning from the past
Ackman first purchased Netflix shares in 2022 and sold them just three months later at a significant loss. "When we first invested at the beginning of 2022," Ackman wrote, "investors were concerned about the intensification of the content investment race among a long list of new competitors in the streaming field."
In April 2022, Netflix reported its first decline in the number of subscribers in a decade, after losing about 200,000 subscribers in the first quarter. The suspension of service in Russia with the outbreak of the war in Ukraine significantly harmed the company and cost it about 700,000 additional subscribers. The stock plummeted by 35%, which led Ackman to sell the 3.1 million shares he held, absorbing a loss of more than $400 million. Ackman admitted that Netflix's plans to launch an ad-supported subscription tier and fight password-sharing were strategically logical but made operations less predictable in the short term. Now he is returning to the streaming giant, which has surged by about 650% since April 2022.
Why now?
Ackman now states: "Netflix has effectively won the streaming wars." Pershing Square noted that Netflix is currently the dominant streaming platform in the world, with more than 325 million subscribers—almost double the total combined subscribers of its two closest competitors, Disney+ and HBO Max. The streaming giant currently converts about 90% of its earnings into free cash flow, which is directed mainly to share buybacks.
Pershing Square emphasized that Netflix's advertising business has grown rapidly toward revenues of about $3 billion, while the cheaper ad-supported tier expands the potential target audience among price-sensitive consumers, especially in international markets.
"Our opportunity arose after Netflix stock fell by about 50% from its peak in June 2025, and the forward P/E ratio dropped from over 40 to 21. The decline began against the backdrop of prolonged uncertainty surrounding the company's attempt to acquire Warner Bros. Discovery—a deal that did not materialize in February 2026, allowing Netflix to receive a cancellation fee of $2.8 billion," the letter stated.
Ackman added: "Looking ahead, we expect Netflix to continue to grow its revenues at a double-digit rate, while content costs will grow at a slower rate than revenues, supporting profit margin expansion. Combined with a significant share buyback program, we estimate that earnings per share could grow at a rate close to 20% per year."
In July, Netflix reported revenues of $12.56 billion in the second quarter, slightly below analyst expectations, while earnings per share of $0.80 exceeded Wall Street forecasts. For the third quarter, the company expects revenues of $12.86 billion and earnings per share of $0.82—a forecast lower than market expectations. Netflix stock has fallen by more than 20% since the beginning of the year.
