Ackman gives up on Netflix, taking $400 million loss as shares tumble

California, April 21 (BUS): Billionaire investor William Ackman liquidated a $1.1 billion bet on Netflix (NFLX.O) on Wednesday, losing more than $400 million as the streaming service’s shares plunged after news of losing subscribers. For the first time in a decade.

Ackman’s hedge fund Pershing Square Capital Management made a surprising turn, selling 3.1 million shares it had bought just three months earlier, as Netflix shares plunged 35% to $226.19, Reuters reported.

In January, the investor transferred more than $1 billion to the streaming service, just days after disappointing expectations for subscriptions sent the stock price plummeting. Now, a second wave of negative news about subscribers — the company said it lost 200,000 — has prompted a fund manager to turn his back on a company he showered with praise just weeks earlier.

In a brief statement announcing the move, Ackman said proposed changes to the business model, including incorporating ads and going after non-paying customers, made sense but would make the company unpredictable in the short term.

“While Netflix’s work is fundamentally easy to understand, in light of recent events, we have lost confidence in our ability to predict the company’s future prospects with sufficient certainty,” he wrote.

Ackman said Pershing Square, which now invests $21.5 billion, is buying shares in only about a dozen companies at a time and needs “a high degree of predictability” in its portfolio companies.

FKN