Bill Ackman has made a lot of bold calls in his career, but few carry the personal stakes of his latest: a return to Netflix four years after one of the most public and painful exits in recent hedge fund history.
Pershing Square Capital Management, the New York-based hedge fund run by Ackman, disclosed this week that it has acquired 3.15 million shares of Netflix, Inc., representing approximately 4.9 percent of the fund's roughly $23 billion portfolio.
The purchase ranks Netflix among Pershing Square's largest positions, marking a significant reversal for a manager who lost more than $400 million on the same stock in 2022 after bailing out just months after buying in, rattled by Netflix's first subscriber decline in a decade.
This time, Ackman's rationale is explicit. In Pershing Square's interim financial report for the six months ended June 30, 2026, the firm stated that "Netflix has since effectively won the streaming wars," and projected that the company would "compound revenue at a double-digit growth rate, with content costs growing more slowly than revenue."
It’s a combination expected to drive meaningful margin expansion. The firm also described Netflix's valuation as representing "a substantial discount," allowing it to acquire a premium business at a favorable price. Netflix shares jumped 3.4 percent on the day of the disclosure.
Earlier this year, Netflix was in a bidding war with Paramount for Warner Bros. Discovery, Inc., ultimately refusing to increase its offer as Paramount’s offer was considered superior by the WBD board.
Netflix entered August 2026 trading roughly 42 percent below its 52-week high of $126.71, at approximately $74.21 per share, according to analysis published by The Motley Fool. At around 23 times forward earnings (well below its five-year average multiple of approximately 40 times) the stock had drifted into territory that looks more like a mature utility than a dominant global platform.
Ackman's thesis, as outlined in the interim report, rests on several intersecting factors. Netflix's position with over 325 million global paid subscribers, which is nearly double Disney+ and HBO Max combined, its conversion of roughly 90 percent of earnings into free cash flow, and a $27.1 billion share repurchase authorization representing approximately nine percent of its market capitalization.
Perhaps the most significant development since Ackman's bruising 2022 exit is the emergence of Netflix's advertising business as a genuine revenue contributor. This barely existed when he first bought in.
Netflix closed its 2026 US upfront advertising season with commitments that nearly doubled year-over-year, according to an announcement by Amy Reinhard, Netflix's president of advertising this week.
Advertisers were drawn to returning franchises including Bridgerton, Emily in Paris, and Love Is Blind, as well as live sports programming spanning NFL games, WWE, and MLB. Demand for the 2027 FIFA Women's World Cup was particularly acute as Netflix reported it had sold out game sponsorships and nearly exhausted all available in-game inventory.
Netflix also expanded its programmatic advertising capabilities through integrations with Google, Amazon, Yahoo, and The Trade Desk, and achieved Media Rating Council accreditation for US in-stream video impressions across connected TV, mobile, and desktop.
The firm says that its ad-supported tier now reaches 190 million monthly active viewers globally, and full-year advertising revenue is projected at approximately $3 billion for 2026. Pershing Square cited this trajectory specifically in its bull case.
The valuation discount Ackman is exploiting sits against a backdrop of solid underlying performance. Netflix reported Q1 2026 revenue of $12.25 billion, up 16 percent year-over-year and slightly ahead of the $12.18 billion analyst consensus.
Not every headline around Netflix this week has been bullish. On August 13, the streamer confirmed it is closing Night School Studio, the developer of Oxenfree, that it acquired in 2021 as its first studio purchase; along with Helsinki-based Moonloot Games, an internally created studio.
A Netflix spokesperson told Game Developer that the company "believe[s] we can operate more strategically and efficiently within our Games business," narrowing its focus to kids games, party games, narrative games, and mainstream games.
The broader investment community has been watching Netflix's valuation reset with growing interest. Pershing Square's track record lends weight to the move: the fund returned 34 percent in 2025 versus 17 percent for the S&P 500, and has averaged 23 percent annual returns over eight years compared to 14 percent for the index, The Motley Fool reported.
The combination of a compressed multiple, a scaling advertising business, a substantial buyback program, and a management team demonstrating cost discipline has made the bear case progressively harder to sustain.
Whether that is enough to fully rehabilitate the stock is a question markets are beginning to answer with or without Ackman showing the way.
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