US hedge fund billionaire sells Netflix stake at huge loss.

Bill Ackman’s Pershing Square fund dumped his 7% stake in Netflix for a loss of about $400m after the streaming service’s value plunges, reversing his bullish position in the streaming giant after it reported an outflow of more than 200,000 subscribers.

The share drop wiped about $50bn off of Netflix’s market value.

The New York-based investor bought more than $1bn of Netflix shares in January, despite grim forecasts about the company’s subscription levels. Ackman said at the time that the subsequent drop in the share price had presented an “attractive” opportunity for his Pershing Square fund.

But Ackman made a U-turn overnight after shares in the online streaming platform plunged more than 35% in reaction to news that Netflix had lost more than 200,000 subscribers in the first three months of the year and was likely to lose a further 2 million over the next quarter, as customers reviewed subscriptions bought at the height of Covid lockdowns.

The hedge fund manager acknowledged that Netflix had a strategy to stem the losses, including by going after non-paying customers more aggressively and incorporating advertising into its streaming service. However, he noted that the changes could take at least one to two years to implement.

“While we believe these business model changes are sensible, it is extremely difficult to predict their impact on the company’s long-term subscriber growth, future revenues, operating margins, and capital intensity,” Ackman said.

The Guardian.