Top Netflix shareholder Bill Ackman has sold his stake in the world’s largest streaming service, sending further shockwaves for the fallen pandemic darling.
It comes as the company lost $50bn in value over the past few days after shares were sent into a frenzy following the trading update which reported heavy losses of 200k subscribers and predicted a further 2.5m losses.
Billionaire Ackman had added Netflix to the portfolio of FTSE 100-listed Pershing Square at the start of the year after describing the US giant’s earlier fall in value as an opportunity too good to miss.
Despite telling investors at the time that he was “all-in on streaming”, adding a major Netflix stake to one in Universal Music Group, he seems to have backtracked on this suggestion, citing the uncertainty of Netflix’s future as the key driver for his sell up.
“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 wrote in a letter to fund’s investors.
As reported byThe Times, Ackman added: “Based on management’s track record, we would not be surprised to see Netflix continue to be a highly successful company and an excellent investment from its current market value.
“That said, we believe the dispersion of outcomes has widened to a sufficiently large extent that it is challenging for the company to meet our requirements for a core holding.”
Following Netflix’s initial tumble, AJ Bell investment director Russ Mould initially said: “Ackman is likely to shrug off any criticism for buying when the problems were clear to see as he is used to going against the tide.
“One must wonder if he might buy more of the company as he takes a longer-term view of its opportunities.”
However, his selling of the stock implies that he is taking short-term view, which is estimated to have cost Pershing $400m and counting.