These are not the best of times for the streaming platform Netflix. Its share price plummeted massively following the exit of billionaire hedge fund manager Bill Ackman of Pershing Square Holdings.
Ackman had liquidated his entire holdings in the company, reportedly taking a $400 million loss, citing uncertainty about Netflix’s long-term business.
The hedge fund manager’s Pershing Square Holdings acquired a $1.1 billion stake in the company in January this year. Amid what it described as uncertainty in Netflix’s emerging business model, it had liquidated its holdings.
Writing to Pershing Square Holdings shareholders over the decision to liquidate the holdings, Ackman had cited the streamer’s plans to adopt ad-supported streaming plans, among others. The plans detract from his analysis of the company and its prospects.
Although Ackman described Netflix’s business as simple to understand, he, however, insisted that the new changes have made him lose confidence and its prospects.
Netflix had pistes a net loss of 200,000 customers for Q1, a big surprise to Investor. This appears to be only the beginning, as the company also forecasts a 2 million loss for Q2.
With the forecast and Ackman’s move, Netflix’s share price dipped 35.1% Wednesday.
With the uncertainty over new revenue models, it’ll be interesting to see how Netflix weathers the storm.
