Shares of Netflix Inc (NASDAQ: NFLX) have been in a freefall over the past ten weeks, starting with news of Omicron in November and exacerbating so much more on fears of inflation and aggressive rate hikes this year.
Then last week, its guidance for subscriber growth came in sharply weaker-than-expected, sending shares down another 30% in a matter of days. All in all, the stock is now down 45% from its ATH – an opportunity that billionaire investor Bill Ackman just couldn’t miss.
Ackman bought 3.1 million shares of Netflix on the sell-off
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Ackman’s Pershing Square loaded up on 3.1 million shares of Netflix amidst the recent sell-off worth about $1.10 billion. The hedge fund manager said:
Many of our best investments have emerged when other investors, whose time horizons are short term, discard great companies at prices that look extraordinarily attractive when one has a long-term horizon.
His outlook is in line with LightShed Partners’ Rich Greenfield, who also said last week that the sell-off in NFLX was a buying opportunity.
Ackman doesn’t see competition as much of a threat for Netflix
Competition has risen sharply for Netflix over the past two years as giants like Disney and WarnerMedia launched their own streaming services. Still, Ackman is convinced Netflix will bring back subscriber growth.
A strong content slate and pricing power were among other reasons why he started investing in Netflix last Friday. Ackman added:
We believe the opportunity to invest in Netflix at current prices offer a compelling risk/reward and likely greater, long-term profits for the funds.
Pershing Square is now one of the biggest 20 shareholders of Netflix. The stock is up 7.0% this morning.
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