The Wall Street mogul who bought £1.1bn of Netflix shares in January is selling at a loss Business

Bill Ackman lost an estimated £300million selling his entire stake in Netflix after the streaming giant revealed a dramatic drop in subscriber numbers.

The Wall Street fund manager exited his stake in Netflix after investing $1.1 billion just three months ago with a promise to back the company for the “long term”.

Mr Ackman’s fund took a major hit when the company’s value fell nearly $60 billion yesterday. His Pershing Square fund was one of Netflix’s top 20 investors.

Shares of Netflix fell nearly 40% as it revealed it had lost subscribers for the first time in more than a decade.

The company had planned to add 2.5 million new subscribers in the first quarter, but lost 200,000 customers instead. Netflix also warned that it would lose another 2 million subscribers in the second quarter.

In a statement to investors, Pershing Square said: “While we have great regard for the management of Netflix and the remarkable business they have built, in light of the tremendous operating leverage inherent in Netflix’s business model. company, changes in the company’s future subscriber growth may have a disproportionate impact on our estimate of intrinsic value.

“In our initial analysis, we viewed this operating leverage favorably because of our long-term growth expectations for the business.”

But Netflix has now said it will chase customers who don’t pay a subscription and use advertising to generate revenue instead. Management said it could take up to two years to make the changes.

Pershing Square said: “While we believe these business model changes are sound, it is extremely difficult to predict their impact on long-term subscriber growth, future revenue, operating margins and the intensity of the capital.”

Netflix has fought off intense competition in the streaming industry. The company led the shift to streaming after it launched in the 2000s, but has since been joined by Amazon, Disney and Apple.

More about this article: Read More
This notice was published: 2022-04-21 09:24:45

Leave a Reply

Your email address will not be published. Required fields are marked *