William Ackman’s Pershing Square Capital Management books $400M losses on Netflix

Billionaire activist investor William Ackman has liquidated a $1.1 billion bet on Netflix, and booked a loss of more than $400 million. The development comes at a time when the video streaming company reported a loss of subscribers for the first time in a decade.

Following the news, Ackman’s hedge fund Pershing Square Capital Management made an abrupt U-turn, and sold 3.1 million shares it had bought just three months ago.

In January 2022, Pershing Square Capital Management had funneled more than $1 billion into Netflix.

Announcing the abrupt move, 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.

“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,” he said.

Rather than wait around for things to improve at Netflix, Ackman booked losses that are calculated to be more than $400 million, said sources familiar with the portfolio. Following the sale, Pershing Square’s portfolios are off roughly two percent for the year, Ackman said.

He went on to add, “One of our learnings from past mistakes is to act promptly when we discover new information about an investment that is inconsistent with our original thesis. That is why we did so here”.

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