William Ackman’s Hedge Fund Takes Stake in Netflix

“I’ve lengthy admired

Reed Hastings

and the outstanding firm he and his group have constructed,” Mr. Ackman stated of Netflix’s chairman and co-chief govt in a tweet Wednesday. “We’re delighted that the market has introduced us with this chance,” he wrote. Mr. Ackman was complimentary of the corporate’s enterprise mannequin in a letter included in his tweet and gave no indication that the funding could be an activist place.

Pershing Sq.’s stake equals about 0.68% of the Los Gatos, Calif.-based firm, based mostly on roughly 455.8 million diluted shares excellent at Dec. 31.

Netflix declined to remark.

Shares of Netflix rose 4% in after-hours buying and selling following information of Pershing’s funding. By way of Wednesday’s shut, the inventory was down about 40% for the yr. It closed Wednesday at $359.70, in contrast with a excessive of $691.69 on Nov. 17.

Whereas he made his identify as an outspoken activist at corporations like

Herbalife Vitamin Ltd.

HLF -0.60%

, Mr. Ackman for the previous a number of years hasn’t taken activist positions and as an alternative has targeted on friendlier investments in well-known corporations like

Domino’s Pizza Inc.

DPZ -2.90%

He additionally raised a record-size blank-check automobile that lined up a fancy deal to take a stake in

Common Music Group

UMG 0.07%

earlier than backing off the plan after pushback from regulators. He has since stated he’s exploring different potential offers.

Netflix’s latest inventory decline got here after the corporate stated final week that it missed its subscriber estimate for the fourth quarter, including 8.3 million subscribers as an alternative of the projected 8.5 million. Netflix stated it expects so as to add a a lot smaller variety of subscribers this quarter than it did a yr in the past because it contends with a crowded streaming market and ongoing disruptions from the Covid-19 pandemic.

Netflix earlier this month additionally raised the value for its month-to-month plans for purchasers within the U.S. and Canada, the primary such enhance since 2020. It cited growing programming prices as the first purpose.

Development within the U.S. has slowed for Netflix lately, and it’s focusing a lot of its efforts abroad. It is also wanting in its rearview mirror extra as

Walt Disney Co.

DIS -2.13%

’s Disney+ and different newer streaming providers are competing for subscribers and content material.

Though traders had been disenchanted with Netflix’s latest outcomes and forecast, it’s nonetheless by far the streaming chief with 222 million paid memberships. In 2021, the corporate had $29.7 billion in income and internet revenue of $5.1 billion.

One other well-known activist,

Carl Icahn,

held an enormous Netflix stake for years and made round $2 billion in revenue when he cashed out of it in 2015, making it one in all his finest bets ever. He first took a stake in 2012 on the urging of his son and deliberate to name for the corporate to discover a sale.

However then he met with Mr. Hastings, who organized for a non-public displaying of the soon-to-debut “Home of Playing cards” drama starring Kevin Spacey, the streamer’s first authentic sequence. After seeing it and understanding Mr. Hastings’ imaginative and prescient, Mr. Icahn determined in opposition to the sale thought and deserted his plans for activism.

—Joe Flint and Cara Lombardo contributed to this text.

Write to Denny Jacob at denny.jacob@wsj.com