Hedge Fund Manager Bill Ackman Sells Entire Netflix Stake, Taking $400 Million Loss

variety.com:

Todd Spangler NY Digital EditorAmid the massive sell-off in Netflix stock triggered by the streamer’s Q1 stumble, billionaire hedge fund manager Bill Ackman liquidated his entire holdings in the company citing new uncertainty about Netflix’s long-term business.Ackman’s Pershing Square Capital Management had acquired about 3.1 million Netflix shares in January.

On Thursday, the firm sold that stake — resulting in about a $400 million loss on the investment.In a letter to Pershing shareholders, Ackman cited Netflix’s plans to adopt a lower-cost, ad-supported streaming plan and to try to monetize on password-sharing users as introducing new X-factors that threw off his original analysis of the company’s prospects. “While Netflix’s business is fundamentally simple to understand, in light of recent events, we have lost confidence in our ability to predict the company’s future prospects with a sufficient degree of certainty,” Ackman wrote.Ackman said Netflix’s move to “modify its subscription-only model” to be more aggressive in going after non-paying customers and to incorporate advertising “are sensible,” but said that “it is extremely difficult to predict their impact on the company’s long-term subscriber growth, future revenues, operating margins, and capital intensity.”Click here to sign up for Variety’s free Strictly Business newsletter covering earnings, financial news, and more.Netflix surprised investors by posting a net loss of 200,000 customers for Q1 — its first decline since 2011 — and forecast a 2 million drop for the second quarter.

That led to the biggest-ever percentage decline in Netflix shares, which dropped 35% Wednesday and wiped out $54 billion in market value.“Based on management’s track record, we.