Bill Ackman, CEO of Pershing Square Capital Management, is one of the most widely-renowned investors of the last few decades. Selling Netflix (NASDAQ: NFLX) stock early was one of his starkest blunders.
Ackman is an activist investor and tends to take a hands-on role in the companies in which he purchases a stake. With Chipotle Mexican Grill (NYSE: CMG), he encouraged management reform after a food safety scandal. He also pushed, successfully, for Wendy’s (NASDAQ: WEN) to spin off Tim Hortons into a separate offering — and both valuations soared.
Pershing Square spent roughly $1.1 billion to acquire over 3.1 million Netflix shares from January 21 to January 26, making it a top 20 shareholder in the streaming business.
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Back in April of 2022, Netflix stock plummeted to levels as low as $174. For the first time since 2011, the company posted a net loss in subscriber count in its Q1 2022 earnings call, totaling 200,000 users — and announced plans to introduce an ad-supported tier and crack down on password sharing.
That announcement didn’t sit well with Ackman — who sold the entirety of his stake on April 20, as detailed in a letter to investors released on the same day. Let’s take a closer look at exactly how much Pershing and Ackman lost on the early exit — including the gains they could have reaped.
Ackman took a $400 million hit — but could have made well over a billion from Netflix stock
The actual loss accrued by Ackman is well-known and highly publicized — amounting to roughly $400 million. However, the billionaire investor, who attributed his sale to uncertainty regarding Netflix’s long-term outlook, also missed out on quite a sizable sum by selling early.
At the time of Pershing’s initial investment, Netflix stock was trading at an average price of $383.69. By press time on January 23, 2025, NFLX shares were trading at a price of $955.85 — a sizable 149.12% higher.
In a stunning stroke of bad luck, Ackman sold the stock at the crevice just above the ‘d’ in the Finbold logo in the chart above.
Had Pershing Square held on to its stake, the original $1.1 billion investment would now be worth roughly $2.74 billion. In absolute terms, Ackman and Pershing missed out on roughly $1.64 billion in profits.
Featured image via Shutterstock
