Pershing Square bets big on Netflix, shares surge

Pershing Square re-entered Netflix with 3.15M shares, citing strong growth prospects. The stock surged 4.7% but is still 42% below its peak. The fund expects double-digit revenue growth and sees the valuation as attractive.

Bill Ackman’s Pershing Square has re-entered Netflix with a 3.15 million-share stake, now representing 4.9% of its portfolio. This move comes after the fund sold its previous Netflix position at a loss of over $400 million in 2022, following the company’s first subscriber decline in decades. Pershing Square now believes Netflix has “effectively won the streaming wars” and expects double-digit revenue growth. The fund anticipates content costs will rise more slowly than revenue, leading to higher profit margins. Netflix’s advertising-supported tier is projected to generate around $3 billion in revenue by 2026, with U.S. Upfront commitments nearly doubling each year. Following the announcement, Netflix shares surged up to 4.7%, though the stock remains about 42% below its peak and trades at 24 times earnings, below its three-year average of 43. Pershing Square’s renewed investment signals strong confidence in Netflix’s future and views the current valuation as a substantial discount. This move could also boost demand for connected TV advertising across the sector.