Never-ending Meltdown, Bill Ackman Leaves Netflix From Investing.com


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By Alessandro Albano

Investing.com – After just three months, Bill Ackman has decided to liquidate his entire stake in Netflix (NASDAQ:) due to the expectations of future subscribers and a changing business model.

Pershing Square (NYSE: Capital), the fund led by Ackman, announced in a letter to shareholders that it has sold its entire stake in the streaming giant, equivalent to approximately $1.1 billion, and that it posted a loss of more than $430. million due to falling stocks on Wall Street.

After reporting its first subscriber drop in over 10 years and forecasting a drop of 2 million new users in the current quarter, Netflix (NASDAQ :)) stock has eroded all the progress made during the pandemic and is back in the ratings. In September 2019 (-35% to $226.19), about $53 billion in capitalization “burned” (the worst session since 2004 according to Bloomberg data).

The “guru” at Pershing Square was alarmed by the change in business model announced by the CEO after the quarterly results, which could include a new paid service to limit ads that will be placed on the platform. This development could take “about two years” for the company.

“While these business model changes make sense — by reading the fund’s letter — it is very difficult to predict their impact on subscriber growth, future revenue, operating margins and capital intensity.” The fund, which holds nearly $20 billion in assets under management with no short positions at the start of March, “lost confidence in Netflix’s future prospects.”

“With changes in Federal Reserve policy, the inflationary environment, geopolitical uncertainty, and the resulting high degree of stock price volatility,” the letter continues, Pershing Square expects “to find good use of Netflix (NASDAQ:) investment returns.”

According to Filippo Dejodovic, chief market strategist at IG Italia, “The volume of sale has been difficult to predict but as we have seen in recent months, Netflix has been experiencing increasingly fierce competition from many competitors interested in acquiring shares in particular. Profitable market: slowing revenue and growth in New users are the first signs of a negative trend that began in November 2021.”

Despite Wednesday’s crash, the IG expert says, “the throne of broadcasting should still be held by Californian giants Los Gatos,” even if competitors “are increasingly fierce, especially Disney+ and Apple TV.” Is it the death of the so-called FAANG? For Diodovich, “It looks like Netflix (NASDAQ 🙂 has left this small group behind”.

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