Wall Street activist investor Bill Ackman has put Netflix (NFLX) back in the spotlight. His firm, Pershing Square Capital Management, disclosed a stake of roughly 3.15 million shares, representing 4.9% of the fund’s portfolio. The news sent Netflix shares up 5.43% in a single day.
Ackman’s moves carry weight because of his track record. Pershing Square manages about $23 billion in assets. The fund returned 34% in 2025, double the S&P 500’s 17% gain. Over the past eight years, it has delivered an annualized return of 23%, far ahead of the S&P 500’s 14%. His style is distinctive: concentrate on a small number of stocks and hold them for years.
This time, Ackman built the position during a turbulent second quarter for the streaming giant. In a shareholder letter, he laid out the bull case. Netflix has more than 325 million global subscribers, nearly double the combined total of its two closest rivals, Disney+ and HBO Max. That scale lets Netflix outspend competitors on content while spreading costs across the industry’s largest user base. The company now converts about 90% of earnings into free cash flow. Advertising revenue is approaching $3 billion this year, and the lower-priced ad-supported tier widens the addressable market among price-sensitive consumers. Live programming accounts for only a small share of watch time but plays a key role in driving signups and retention. Ackman expects Netflix to compound revenue at a double-digit rate, with slower content spending growth leading to margin expansion.
The stock, however, remains deep in correction territory. The latest price is still about 42% below its all-time high. On July 16, Netflix reported second-quarter results that beat on profit but slightly missed on revenue. Third-quarter revenue guidance of 12% growth was only a modest slowdown from the 13% posted in the second quarter. Yet the market reacted sharply: shares fell more than 7% the next day and hit a 52-week low of $65.08. Since then, the stock has gradually recovered, rising about 18% from that low to $78.24.
Valuation has also become more reasonable. Netflix trades at roughly 24 times earnings, below the S&P 500 average of about 26 and far below its five-year average of about 40. Fundamentals remain solid, with double-digit growth and healthy margins. In the first half of 2026, members watched 97 billion hours of content, up 2% year over year, even as the Winter Olympics and World Cup competed for attention. Management stressed in its shareholder letter that “not all hours are equal,” and said the company remains focused on high-quality programming, a wide variety of shows, and total viewing hours.
Netflix shares are still down about 18% year to date. Whether Ackman’s stake marks a bottom remains to be seen. But given the current valuation and growth outlook, the streaming leader’s pullback may offer long-term investors a chance to take a fresh look. For those who believe in the long-term trend of streaming, the question now being debated is whether Ackman’s new target has been wrongly punished.
