TLDR
- Bill Ackman’s Pershing Square Capital Management disclosed a new 3.15 million-share stake in Netflix, representing 4.9% of its portfolio.
- Netflix stock rose as much as 4.7% Thursday, trading up around 3.5% by mid-morning.
- Pershing Square said Netflix has “effectively won the streaming wars” and expects double-digit revenue compounding.
- Netflix’s ad-supported tier is on track to generate approximately $3 billion in revenue in 2026, nearly doubling its U.S. Upfront ad commitments year-over-year.
- The stock is down roughly 42% from its peak last year and now trades at 24 times earnings, well below its three-year average of 43.
Netflix (NFLX) stock jumped as much as 4.7% Thursday morning after Bill Ackman’s Pershing Square Capital Management disclosed a new 3.15 million-share position in the streaming company. By mid-morning, the stock was still up around 3.5%, trading near $76.91.
The disclosure came through Pershing Square’s semiannual report released Wednesday evening. The position represents 4.9% of the hedge fund’s portfolio.
Pershing Square is known for holding concentrated positions in a small number of companies, typically fewer than a dozen at a time. A stake of this size is a meaningful endorsement.
The fund’s letter to shareholders made its case clearly. “Netflix has since effectively won the streaming wars,” Pershing wrote, adding that it expects the company to “compound revenue at a double-digit growth rate, with content costs growing more slowly than revenue, driving continued margin expansion.”
The fund also described Netflix’s current valuation as a “substantial discount,” calling it “highly attractive in terms of business quality and prospective earnings growth.”
This re-entry carries extra weight given Pershing Square’s history with the stock. The fund invested over $1 billion in Netflix in early 2022, only to exit months later at a loss exceeding $400 million. Coming back says something.
Netflix stock has fallen roughly 42% to 50% from its June 2025 highs, hurt by a failed attempt to acquire Warner Bros. Discovery, reports of other failed deal talks, and concerns about user engagement.
Ad Revenue Momentum Building
Despite the stock’s slide, Netflix has been pulling levers to improve its outlook. Its ad-supported subscription tier is gaining traction fast, with 2026 U.S. Upfront advertising commitments nearly doubling year-over-year.
The company is targeting approximately $3 billion in ad revenue for 2026. That tier is becoming a genuine second revenue engine.
The expansion into live sporting events is also drawing in a new type of viewer that Netflix historically did not attract. This broadens its audience base without heavy content cost increases.
Valuation the Core Argument
At 24 times earnings, Netflix is trading well below its three-year average multiple of 43. For a company with consistent double-digit revenue growth and expanding margins, that gap stands out.
Ackman’s letter leaned hard on this point. The valuation, combined with the ad revenue ramp and content cost discipline, forms the core investment case Pershing is making.
The broader market provided a modest backdrop Thursday, with the S&P 500 up 0.2%, the Dow up 0.2%, and the Nasdaq edging 0.1% higher. Netflix’s move outpaced all three by a wide margin, driven entirely by the company-specific news.
One lingering overhang: Netflix’s CEO and CFO both sold stock in early August, and analysts flagged slightly slower revenue growth in Q3 guidance following Q2 earnings.
Netflix’s ad-supported tier remains on track to surpass $3 billion in revenue this year, with Upfront commitments nearly doubling year-over-year.
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