Hedge fund magnate Bill Ackman has acquired more than 3.1 million shares in Netflix Inc., offering a vote of confidence in the streaming giant after the stock collapsed in recent days.
Ackman’s firm, Pershing Square Capital Management, is now among Netflix’s top 20 shareholders, the investor said in a tweet on Wednesday. Netflix climbed as much as 6.2% in after-market trading following Ackman’s announcement.
Netflix shares had tumbled almost 50% from their November high. The decline accelerated last week after the company said growth was slowing and it wasn’t sure why. The company added 18 million customers last year, the least since 2015, and forecast the slowest start to a year in at least a decade.
Netflix shares rose as much as 4.8% in pre-market trading on Thursday.
We recently purchased more than 3.1m shares of @Netflix which makes us a top-20 holder. I have long admired Reed Hastings and the remarkable company he and his team have built. We are delighted that the market has presented us with this opportunity. https://t.co/BNx1EWUVGh
— Bill Ackman (@BillAckman) January 26, 2022
Netflix leadership has expressed confidence in its long-term vision. The world’s most popular streaming service has a leading position in almost every major market, and the transition from linear to TV to streaming is still in its underway.
Ackman echoed these sentiments in a letter to investors attached to his tweet Wednesday.
“The opportunity to acquire Netflix at an attractive valuation emerged when investors reacted negatively to the recent quarter’s subscriber growth and management’s short-term guidance,” Ackman wrote. He cited the company’s favorable characteristics, including its subscription-based business model and its management team. “We are all-in on streaming.”
Ackman hasn’t run a proxy fight since 2017 when he lost his bid for seats on the board of Automatic Data Processing Inc. Since then, he has moved to a less combative approach, talking up his recent investments in companies like Starbucks Corp. and Universal Music Group.
Pershing bought his Netflix shares beginning Friday and over the last few days, funded by the unwinding of the “substantial majority” of an interest-rate hedge, which generated proceeds of $1.25 billion, Ackman said in the letter.