American billionaire investor and hedge fund manager William Ackman has suffered a $400 million loss after selling a $1.1 billion stake in subscription streaming service and product company Netflix Inc. (NFLX) after the company announced that it had lost subscribers for the first time in ten years.
Netflix revealed it has lost 200,000 subscribers in the first quarter falling far much short of its expectation of adding over 2.5 million subscribers. Last month, the company resolved to pull out of Russia after the country invaded Ukraine, this move alone resulted to a loss of 700,000 subscribers.
This announcement resulted to a significant decline of the company’s stock price. Ackman owned hedge fund Pershing Square Capital Management sold the 3.1 million Netflix shares after the stock plunged by 35% to $226.19. The hedge fund had bought these shares three months ago.
According to Ackman, the proposed new business model changes by Netflix including incorporating advertising and going after non-paying customers do make sense but would make the company unpredictable in the short term.
“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,” added Ackman.
