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Pershing Square Purchase Boosts Netflix Stock

The Pershing Square Capital position in Netflix is now worth about $1.2 billion.

Bill Ackman

Bill Ackman Facebook

Bill Ackman’s Pershing Square Capital Management bought a lot of Netflix stock last week. The firm acquired 3.1 million shares of Netflix. The acquisition came after Netflix stock plummeted due to the bad news about a drop off in new subscriptions and the company’s need to raise subscription fees.

The Pershing Square investment then helped to offset some of the drop in Netflix stock value. At the end of last week Netflix stock rebounded after hitting a 22 month low. The stock closed on Friday at $384.36.

So the Pershing Square Capital position in Netflix is now worth about $1.2 billion. It is now one of the top 20 stakeholders in the company.

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The opportunity to acquire Netflix at an attractive valuation emerged when investors reacted negatively to the recent quarter’s subscriber growth and management’s short-term guidance. Netflix’s substantial stock price decline was further exacerbated by recent market volatility,” Pershing Square Capital told its investors in a letter. “We have greatly admired Netflix both as consumers and as investors, but have never previously owned a stake in the company. Netflix is a primary beneficiary of the growth in streaming and the decline in linear TV driven by its superior customer experience, a vast and diverse amount of superb, constantly refreshed content, global improvements in bandwidth, and the proliferation and continuous improvement and convenience of devices on which one can watch.”

Perishing Square also explained that the firm began analyzing Netflix in connection with its investment in Universal Music Group. As such, it was prepared to make its move when the stock price declined sharply.

“Now with both UMG and Netflix, we are all-in on streaming as we love the business models, the industry contexts, and the management teams leading these remarkable organizations,” said Pershing Square.

The firm divested itself of other investments in order to fund the Netflix position.



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