Billionaire investor William Ackman is giving Netflix (NASDAQ: NFLX) another chance. In fact, his firm, Pershing Square (NYSE: PSUS), just took a new stake in Netflix. The last time he was in the stock was in 2022, but he sold it a few months later after losing $400 million. Now, Ackman is back.
Since he sold NFLX 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 Did Ackman Sell NFLX in 2022?
Ackman’s first investment in Netflix did not last long.
In April 2022, Netflix reported that it had lost about 200,000 subscribers during the first three months of the year. It was the company’s first subscriber loss in about a decade. Netflix was also hurt by the decision to stop its service in Russia after Russia invaded Ukraine. That move cost the company about 700,000 members.
NFLX shares then dropped about 35%.
Ackman’s firm owned about 3.1 million Netflix shares. He decided to sell them all, taking a loss of more than $400 million.
At the time, Ackman said Netflix’s plans to add advertising and stop people from sharing passwords made sense. But he believed those changes would make the company harder to predict in the short term. The decision was costly because Netflix later made a huge comeback.
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.
Advertising Could Be a Big Opportunity
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 NFLX’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 (NASDAQ: WBD).
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.
Netflix Still Has Some Problems
In July, the company reported second-quarter revenue of $12.56 billion. That was slightly below what analysts expected. However, NFLX still reported earnings per share of $0.80, which was better than expected. Revenue increased in every major region. Latin America was especially strong, with revenue rising 21%. Revenue in Asia Pacific increased 16%.
In addition, live programming is also becoming more important for Netflix.
The company expects live programming to make up about 5% of its content budget. But live events have already helped Netflix attract new customers. Six of the company’s 10 biggest new-member sign-up days over the past five years came from live programming.
What’s Next?
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 NFLX investment cost him more than $400 million. This time, he believes the story could have a much better, far more profitable ending.