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'Long-term' Netflix backer sells shares for $400M loss after three months

Netflix on iPhone X
Netflix on iPhone X (Image credit: iMore)

What you need to know

  • Netflix shares have absolutely cratered after it emerged the company is losing subs.
  • One tycoon who bought $1.1 billion in Netflix shares in January has sold up.
  • Bill Ackman lost almost $400M despite promising to back the company long term.

A Wall Street fund manager has sold his firm's entire Netflix stake to the tune of $400M in losses, just three months after buying $1.1 billion in shares as a 'long-term' investment.

The Telegraph reports:

Bill Ackman has lost around £300m with the sale of his entire stake in Netflix after the streaming giant revealed a dramatic decline in its subscriber numbers.The Wall Street fund manager has exited his Netflix stake after investing $1.1 billion just three months ago with a promise to back the company for the "long-term".

As the report notes, Netflix shares fell by a staggering 34% on Wednesday, after the company revealed it had lost 200,000 subscribers in Q1 and expected to lose another 2 million in Q2. Ackman told Pershing Square investors that "in light of the enormous operating leverage inherent in the company's business model, changes in the company's future subscriber growth can have an outsized impact on our estimate of intrinsic value." Ackman said the firm's original analysis viewed this leverage as favorable "due to our long-term growth expectations for the company."

As the report notes, now Netflix is hoping to beef up its business by clamping down on some 100 million users who share a password with another paying household and is considering new lower tier subscriptions subsidized by ads.

Despite being one of the best iPhone apps for streaming original content on demand, Netflix also said the emergence of strong rivals such as Disney+ was also having an impact on its business.

Stephen Warwick
Stephen Warwick

Stephen Warwick has written about Apple for five years at iMore and previously elsewhere. He covers all of iMore's latest breaking news regarding all of Apple's products and services, both hardware and software. Stephen has interviewed industry experts in a range of fields including finance, litigation, security, and more. He also specializes in curating and reviewing audio hardware and has experience beyond journalism in sound engineering, production, and design.

Before becoming a writer Stephen studied Ancient History at University and also worked at Apple for more than two years. Stephen is also a host on the iMore show, a weekly podcast recorded live that discusses the latest in breaking Apple news, as well as featuring fun trivia about all things Apple.

1 Comment
  • Confused. So this “long term” backer only bought Netflix stock 3-months ago? Sounds like a pretty short term backer to me. Also sounds a bit like a moron to sell now. Oh well, there’s lots of hyperbole about Netflix flying around now anyway. This goes right along with it.