Ackman Bets $1 Billion on Netflix Redemption After $400 Million 2022 Loss

Pershing Square Capital Management has reinstated a position in Netflix worth roughly $1 billion, following a reported $400 million loss on the firm's 2022 investment. The new stake, representing about 5% of the portfolio, was disclosed in the firm's second-quarter filing alongside new stakes in payment networks and a full exit from its Google-parent holding.

Bill Ackman's previous attempt to capitalize on Netflix ended when he exited the position within three months of purchasing it. At the time, Ackman stated that Pershing had lost confidence in its ability to predict the company's future prospects with sufficient certainty. The current investment marks a return to the stock after it closed at $71.79 on September 18, down 40.56% over the past year and 23.43% year to date.

The bull thesis relies on Netflix's dominant market position and its advertising tier. The streaming giant passed 325 million paid subscribers in 2025 and generated $9.46 billion in free cash flow, a 36.68% year-over-year increase. Management claims Netflix has effectively won the streaming wars, with a subscriber base exceeding competitors by a wide margin.

Advertising is central to this outlook. For the 2026 fiscal year, Netflix projects ad revenue will reach $3 billion, marking an approximate doubling of the more than $1.5 billion generated in 2025. In ad markets, the tier accounted for over 60% of first-quarter sign-ups, while the number of advertisers increased by 70% year-over-year to exceed 4,000 clients. Co-CEO Greg Peters described the revenue per member gap between the ad tier and standard plan as near-term under-realized revenue growth, signaling potential pricing power.

However, growth metrics are decelerating. CFO Spence Neumann framed 2026 as a year of 13% to 14% top-line growth and about $6 billion in incremental revenue year-over-year. Viewing hours grew only 2% in the first half of 2026, leading Wells Fargo's Steven Cahall to maintain an Underweight rating due to softer engagement.

Valuation concerns persist, with a trailing P/E of 23x against an analyst target of $93.37. The bear case suggests that engagement is stalling while content spend rises approximately 10% in 2026. Additionally, the failed acquisition of Warner Bros. Discovery, from which Netflix collected a $2.80 billion termination fee, signals management's search for external growth. Disney continues to integrate Disney+, Hulu, and ESPN into a bundle capable of rivaling Netflix's margins.

The outcome of Ackman's bet hinges on the ad tier's performance. If the $3 billion revenue target is met and average revenue per member converges toward the standard plan, the investment may prove successful. If not, the firm risks repeating its 2022 loss.