Hedge fund titan Bill Ackman is making a significant return to Netflix, four years after a swift exit from the streaming giant. His Pershing Square Capital Management has disclosed a new position in the company, signaling a renewed confidence in Netflix's dominant market position and attractive valuation.
In its semiannual report, Pershing Square highlighted that Netflix has emerged victorious from the intense competition for subscribers. The report states that Netflix boasts a leading market share, stronger profit margins, and a valuation that has become increasingly appealing after a considerable sell-off in its stock price. "We acquired a position in Netflix, a business we briefly owned in 2022 and have followed closely ever since," Pershing Square noted.
The news sent Netflix shares up by nearly 4% on Thursday. This move marks a significant turnaround for Ackman, who had initially built a substantial Netflix stake in early 2022. However, he divested the entire holding just three months later following Netflix's announcement of its first subscriber decline in over a decade, which caused a sharp drop in the stock. At the time, Ackman cited uncertainties in the company's business model as a reason for his exit.
Pershing Square now asserts that Netflix has "effectively won the streaming wars," pointing to its subscriber base exceeding 325 million, nearly double that of Disney+ and HBO Max combined. This significant scale allows Netflix to invest heavily in content while distributing those costs across a much larger audience than its competitors, leading to potentially higher profit margins.
Ackman's re-entry comes after a substantial reset in Netflix's valuation. Pershing Square observed that Netflix shares have fallen approximately 50% from their June 2025 peak of $134. This decline has reduced the stock's valuation to about 21 times forward earnings, down from over 40 times. The investment firm's bullish outlook is based on a combination of expected revenue growth at a double-digit rate, slower increases in content costs, and aggressive share repurchase programs, which are projected to drive annual earnings growth close to 20%.
"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," Pershing Square concluded in its report.
