Billionaire investor William Ackman is giving Netflix (NASDAQ: NFLX) another chance.
In fact, his firm, Pershing Square, just took a new stake in Netflix. The last time he was in the stock was 2022, but he sold it a few months later after losing $400 million.
Now, Ackman is back.
Since he sold Netflix in 2022, the stock has risen nearly 650%. And Netflix has changed a lot during that time. The company has cracked down on password sharing, added a cheaper plan with ads and expanded into live events and sports. Pershing Square now believes Netflix has become the clear winner of the streaming business.
Why Does Ackman Like Netflix Now?
Pershing Square believes Netflix is now the strongest streaming company in the world.
Netflix has more than 325 million subscribers. That is almost twice the combined subscriber base of Disney+ and HBO Max, according to Pershing Square.
The company has also become better at controlling its spending. Netflix is still spending billions of dollars on movies and shows, but its content spending has grown much more slowly in recent years. At the same time, the company is generating a lot of cash.
Pershing Square added that Netflix now turns about 90% of its earnings into free cash flow.
Netflix’s advertising business is another reason Ackman is interested.
The company has quickly grown its advertising business toward $3 billion. Netflix also offers a cheaper subscription plan that includes ads. This gives customers another option if they do not want to pay for the company’s more expensive plans.
Pershing Square believes this could be especially helpful in international markets, where customers may be more careful about how much they spend on entertainment. The ad business could also give Netflix another source of revenue without requiring the company to raise subscription prices.
Netflix Stock Has Become Cheaper
Another reason Ackman is buying Netflix now is the stock’s lower price. Netflix shares have fallen roughly 50% from their June 2025 high of $134. That drop made the company much cheaper based on its expected future earnings. Pershing Square says Netflix’s valuation fell from more than 40 times forward earnings to about 21 times. The stock also came under pressure because of Netflix’s attempted deal for Warner Bros. Discovery.
Investors also became worried about slower viewer engagement and the possible impact of artificial intelligence on the entertainment industry. However, Pershing Square does not believe those risks are as serious as some investors think.
In short…
Netflix now has a significant global customer base, a growing advertising business, strong cash flow and a bigger presence in live entertainment.
Ackman is betting that these changes make Netflix a stronger and more predictable business.
His first Netflix investment cost him more than $400 million. This time, he believes the story could have a much better, far more profitable ending.
Sincerely,
Ian Cooper
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