“Bill Ackman Dumps Netflix with a massive loss of some $430 million in less than four months, on his investment”
WEALTH TRAINING COMPANY
But as we noted, soaring cost-push inflation would hurt household budgets, and reduce discretionary spending. Moreover, since the Russian Ukrainian war and the raft of sanctions on Russia the situation has deteriorated beyond our worst expectations.
Our fears were confirmed as it was revealed by Kantar’s research on April 19 that the number of UK households subscribing to at least one streaming service shrank in the first quarter of 2022. A total of 1.51 million subscriptions to SVOD services were canceled in the period, up from 1.04 million in the previous quarter and from 1.2 million a year ago.
NFLX stock crashed a record 35% on April 20, then Bill Ackman dumped Netflix with a huge $430 million loss in less than four-month
In a release published after the close, Ackman’s Pershing Square said that it has sold its entire investment in Netflix, which was purchased in January. “The loss on our investment reduced the Pershing Square Funds’ year-to-date returns by four percentage points. Reflecting this loss, as of today’s close, the Pershing Square Funds are down approximately two percent year-to-date.”
“The loss on our investment reduced the Pershing Square Funds’ year-to-date returns by four percentage points”
PERSHING SQUARE
“Yesterday, in response to continued disappointing customer subscriber growth, Netflix announced that it would modify its subscription-only model to be more aggressive in going after non-paying customers and to incorporate advertising, an approach that management estimates would take one to two years to implement. 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.
“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” – Bill Ackman
We require a high degree of predictability in the businesses in which we invest due to the highly concentrated nature of our portfolio. While Netflix’s business is fundamentally simple to understand, in light of recent events, we have lost confidence in our ability to predict the company’s prospects with a sufficient degree of certainty. 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, ” wrote Bill Ackman’s PSF.
Bill Ackman Dumps Netflix is a sign that discretionary spending is under pressure, another reason why central banks are likely to pivot to being Dovish
