William Ackman’s hedge fund Pershing Square Holdings Ltd said on Wednesday that it exited its Netflix Inc investment as the streaming service’s stock price plunged and the billionaire investor absorbed more than $400 million in losses on the bet.
The shares tumbled 35% on Wednesday to close at $226.19, just 24 hours after the company announced that it had lost subscribers for the first time in a decade.
Ackman, who had become the company’s most prominent backer when he said he bought 3.1 million shares in January, reacted quickly and boldly – selling everything.
“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 future prospects with a sufficient degree of certainty,” his hedge fund said in a statement.
(Reporting by Svea Herbst-Bayliss with additional reporting by Tiyashi Datta in Bengaluru; Editing by Sriraj Kalluvila, Bernard Orr)