The founder and CEO of Pershing Square Capital Management has said that the hedge fund has picked up a new stake in Netflix in the latest quarter.

  • In 2022, the investor sold NFLX shares after holding it for just three months, clocking a loss of more than $400 million after the stock plunged due to losing subscribers for the first time in a decade.
  • The hedge fund now believes that Netflix has since effectively won the streaming wars.
  • Pershing Square noted that Netflix is now the dominant global streaming platform, lauded its content discipline and cash position, and also highlighted the buying opportunity after shares fell about 50% from their June 2025 highs. 

Billionaire investor William Ackman is taking a chance once again on Netflix Inc. (NFLX) by acquiring a fresh stake in the streaming giant through Pershing Square Holdings Ltd. (PS), the publicly traded investment vehicle managed by the Pershing Square investment firm.

This is Ackman’s second time investing in the company. In 2022, the investor sold NFLX shares after holding it for just three months, clocking a loss of more than $400 million. However, the stock managed to rebound spectacularly, having risen nearly 650% since then, driven by a password-sharing crackdown, the introduction of a cheaper ad-supported subscription tier, and a move into live content and sports. 

“When we first invested in early 2022, investors feared an escalating content arms race among a crowded field of streaming entrants. At the same time, cash content spend substantially exceeded content amortization, weighing on free cash flow. The launch of a previously disavowed advertising tier added further uncertainty,” Pershing Square said in its latest Investment Manager’s Report. 

“Netflix has since effectively won the streaming wars,” it added. 

Why Ackman Sold Netflix In 2022

In April 2022, Netflix reported its first subscriber loss in a decade, losing about 200,000 subscribers in the first quarter. The suspension of service in Russia amid the onset of the Ukraine war hit the company hard, costing it about 700,000 members. 

The stock plunged 35%, prompting Ackman’s Pershing Square to sell its 3.1 million shares for a loss of more than $400 million. Ackman acknowledged that Netflix’s planned moves to introduce advertising and crack down on password sharing made strategic sense but would make the business harder to predict in the near term. 

Since Pershing Square concentrates its portfolio in roughly a dozen companies and requires a high degree of predictability, Ackman said at the time that he had “lost confidence” in the ability “to predict the company's future prospects with a sufficient degree of certainty." 

What Makes Netflix Attractive Now?

Pershing Square noted that Netflix is now the dominant global streaming platform, boasting over 325 million subscribers, nearly double the combined base of its two closest competitors, Walt Disney’s (DIS) Disney+ and Warner Bros Discovery’s (WBD) HBO Max.

The firm also lauded Netflix’s content discipline, noting that cash content spend has grown at just a 2% annual rate since 2021, further noting that the streaming giant now converts approximately 90% of earnings into free cash flow, primarily redeployed into share buybacks. 

In its release, Pershing Square highlighted that Netflix’s advertising has scaled rapidly toward $3 billion, while its lower-priced ad-supported tier broadens the addressable market among price-conscious consumers, particularly in international markets. 

“Our opportunity arose after Netflix’s share price fell ~50% from its June 2025 high of $134, de-rating from over 40 times forward earnings per share to 21 times. The decline began with prolonged uncertainty around the company’s bid for Warner Bros. Discovery, which it ultimately lost in February 2026, enabling it to collect a $2.8 billion termination fee. Investor focus has since shifted to plateauing engagement trends and the longer-term risk AI-generated video poses to content creation,” the firm said. 

The firm also argued that short-form video is taking share mainly from linear TV and weaker streaming services, not Netflix. Pershing believes AI risks are overstated, as producing high-quality long-form content remains costly, while Netflix’s scale and AI-powered recommendations, as well as ad targeting, could strengthen its competitive edge.

“Looking forward, we expect Netflix to compound revenue at a double-digit growth rate, with content costs growing more slowly than revenue driving continued margin expansion. Combined with a robust buyback program, we estimate earnings should compound at close to 20% annually,” it said. 

“We believe the company’s current valuation multiple represents a substantial discount for a business with such a strong growth profile and dominant market position,” it added. 

Netflix Recent Performance

In July, Netflix reported second-quarter (Q2) revenue of $12.56 billion, slightly below analyst estimates, while earnings per share of $0.80 beat Wall Street expectations. 

All regions reported growth in revenue, with Latin America leading with 21% growth and 16% in Asia Pacific. Netflix also said that live programming is expected to account for 5% of its content budget but has driven six of its 10 biggest new-member sign-up days over the past five years.

Meanwhile, for the third quarter (Q3), Netflix forecast revenue of $12.86 billion and EPS of $0.82, below expectations. The company also narrowed full-year revenue guidance to between $51 billion and $51.4 billion. 

Management also reiterated that it remains open to selective mergers and acquisitions, but maintains a high bar for large deals after walking away from Warner Bros. Discovery.

NFLX shares are down more than 20% year-to-date, while DIS and WBD have posted more modest declines. 

NFLX Stock: Retail Stance

On Stocktwits, retail sentiment around NFLX stock was ‘bearish’ at the time of writing. 

One user said, “$NFLX The march upward is upon us. Long and strong. NFLX price action is now holding above a critical level, resistance is turning to SUPPORT at ~$75.05. News about Ackman's fund purchasing NFLX may be further fuel to higher highs and higher lows. EASY MONEY.”

However, another user said, “$NFLX stop hunt huge drop coming.”

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