Bill Ackman Doubles Down on Netflix Stock After Costly Defeat

Bill Ackman's Pershing Square Capital Management disclosed a new 3.15 million-share position in Netflix Inc. (NASDAQ:NFLX) on August 13, 2026, four years after losing more than $400 million on the same stock.

The hedge fund declared Netflix the winner of the streaming wars and bought in while shares traded roughly 50% below their June 2025 peak. Recognizing the signs of financial success in a beaten-down stock takes conviction, and the details behind Ackman's reasoning are worth examining.

Why Bill Ackman bought Netflix stock again after a $400 million loss

Pershing Square invested over $1 billion in Netflix in early 2022, only to exit months later with a loss exceeding $400 million after the company reported its first subscriber decline in a decade, according to Benzinga.

Ackman bought shares at an average price near $40 on a split-adjusted basis and sold near $22.50 in April 2022. The stock eventually recovered, rising more than 700% from its 2022 low of about $16.64 to its June 2025 peak near $134 as Netflix cracked down on password sharing and launched an ad-supported tier. Ackman sat on the sidelines through that entire rally, making this re-entry a significant reversal for a manager known for high-conviction bets.

Bill Ackman's new Netflix stake includes 3.15 million shares

The new Netflix stake represents 4.9% of Pershing Square's portfolio, making it one of six major additions disclosed in the firm's semi-annual report for the six months ending June 30, 2026, as TipRanks reported. The other new positions include Visa Inc. (NYSE:V), Mastercard Inc. (NYSE:MA), S&P Global Inc. (NYSE:SPGI), Intercontinental Exchange Inc. (NYSE:ICE), and Alcon AG (NYSE:ALC).

Microsoft Corp. (NASDAQ:MSFT) remains Pershing Square's largest holding at 12.4% of the portfolio, followed by Uber Technologies Inc. (NASDAQ:UBER) at 12%, Yahoo Finance indicated. Netflix's 4.9% weighting is meaningful but not a concentrated bet by Ackman's historical standards.

Why Bill Ackman thinks Netflix won the streaming wars

Pershing Square stated in its investor report that "Netflix has since effectively won the streaming wars." The hedge fund expects double-digit annual revenue growth, with content costs growing more slowly than revenue, driving continued margin expansion. Pershing Square also highlighted that Netflix's advertising business has scaled toward $3 billion in annual revenue.

The firm argued that Netflix's current valuation represents a substantial discount to its intrinsic value, noting the stock's roughly 50% decline from its June 2025 peak created the entry point, as Yahoo Finance reported. Pershing Square also noted that short-form video from social apps is taking share mainly from linear television and weaker streaming rivals, not from Netflix.

Netflix's Q2 2026 earnings show continued growth

Netflix's second-quarter 2026 results showed continued financial strength, as detailed in the company's SEC filing.

• Operating income of $4.2 billion, up 11% year over year
• Operating margin of 33.4%, compared with 34.1% in the second quarter of 2025
• Diluted earnings of $0.80, up from $0.72 a year earlier
• Full-year 2026 revenue guidance narrowed to $51 billion to $51.4 billion

Netflix leads the industry with more than 325 million subscribers, nearly double the combined total of Disney+ and HBO Max. Content costs have grown at about 2% annually while the company converts roughly 90% of its earnings into free cash flow, the kind of profile that typically appeals to investors seeking durable business models.

Netflix viewership growth remains a risk for investors

Netflix members watched more than 97 billion hours of content in the first half of 2026, a 2% increase year over year, the company disclosed in its shareholder letter filed with the SEC. The growth rate improved from 1.5% in 2025, but it remains modest for a platform spending billions on content annually.

Netflix also announced it would publish its detailed engagement report once a year instead of twice, a decision that drew scrutiny from analysts. Companies generally add transparency when metrics improve and reduce it when trends soften, and you may want to factor that pattern into your own assessment of the investment case.

Netflix stock's valuation has fallen to about 21 times earnings

Netflix shares traded near $74 on August 13, down roughly 21% year-to-date and about 50% below the June 2025 peak of $134. The decline compressed the stock's price-to-earnings ratio from over 40 times forward earnings to approximately 21 times.

Part of the selloff followed uncertainty around Netflix's failed bid for Warner Bros. Discovery, which it lost in February 2026, collecting a $2.8 billion termination fee instead. Pershing Square viewed the resulting price drop as a buying opportunity in a business it considers a premium franchise.

Risks to consider before following Ackman into Netflix stock

Ackman's 2022 exit serves as its own cautionary example. He bought with conviction, sold within three months, and watched the stock rally hundreds of percent without him. Conviction alone does not guarantee results, and a billionaire's portfolio constraints differ significantly from those of an individual investor building for retirement.

You may also want to weigh the engagement trends and the competitive landscape. Free social apps like TikTok and YouTube continue to absorb viewer attention, and Netflix's decision to report engagement data less frequently may limit your ability to track whether the platform's growth story holds up in real time.

Bottom line

Ackman's return to Netflix reflects a belief that the streaming leader's financial profile has strengthened enough to justify a second bet, even after a painful first attempt. The Q2 numbers support parts of that case, but the modest engagement growth and reduced transparency around viewing data leave questions open.

Before you start investing in any stock based on a prominent fund manager's moves, weigh whether a position at 21 times earnings in a company with slowing engagement growth fits your own time horizon and income needs. Ackman's track record includes both spectacular wins and costly exits, and your portfolio does not need to mirror either outcome.

This article is for informational purposes only and should not be considered investment advice.

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