Bill Ackman's Pershing Square Capital Management has re-entered Netflix Inc. with a 3.15 million-share position, marking a notable reversal from a 2022 exit that cost the hedge fund more than $400 million. The stake, disclosed in the firm's interim report for the six months ended June 30, 2026, represents roughly 4.9% of Pershing Square's $23 billion portfolio, placing Netflix among its largest holdings.
The move comes as Netflix shares trade about 42% below their 52-week high of $126.71, at approximately $74.21 per share as of early August 2026, according to analysis from The Motley Fool. At roughly 23 times forward earnings—well under its five-year average multiple of about 40 times—the stock has entered a valuation zone more typical of a mature utility than a dominant global streaming platform.
In its interim report, Pershing Square argued that Netflix has "effectively won the streaming wars," projecting double-digit revenue growth with content costs rising more slowly than revenue. That combination, the firm said, should drive meaningful margin expansion. The fund also described Netflix's valuation as representing "a substantial discount," allowing it to acquire a premium business at a favorable price. Shares jumped 3.4% on the day of the disclosure.
Netflix's subscriber base stands at over 325 million global paid members, nearly double the combined totals of Disney+ and HBO Max. The company converts roughly 90% of earnings into free cash flow and has a $27.1 billion share repurchase authorization, equivalent to about 9% of its market capitalization. These factors, alongside a scaling advertising business, form the core of Ackman's bull case.
The advertising segment, which barely existed when Ackman first bought in, has become a significant revenue contributor. Netflix closed its 2026 U.S. upfront advertising season with commitments that nearly doubled year-over-year, according to Amy Reinhard, president of advertising. Advertisers were drawn to returning franchises such as Bridgerton, Emily in Paris, and Love Is Blind, as well as live sports including NFL games, WWE, and MLB. Demand for the 2027 FIFA Women's World Cup was particularly strong, with Netflix reporting sold-out game sponsorships and nearly exhausted in-game inventory.
Netflix has also expanded programmatic advertising through integrations with Google, Amazon, Yahoo, and The Trade Desk, and achieved Media Rating Council accreditation for U.S. in-stream video impressions across connected TV, mobile, and desktop. The ad-supported tier now reaches 190 million monthly active viewers globally, with full-year advertising revenue projected at approximately $3 billion for 2026.
The valuation discount sits against a backdrop of solid underlying performance. Netflix reported Q1 2026 revenue of $12.25 billion, up 16% year-over-year and slightly ahead of the $12.18 billion analyst consensus. However, not all news is bullish. On August 13, the streamer confirmed it is closing Night School Studio, the developer of Oxenfree acquired in 2021, along with Helsinki-based Moonloot Games, an internally created studio. A spokesperson told Game Developer that the company believes it can "operate more strategically and efficiently within our Games business," narrowing focus to kids, party, narrative, and mainstream games.
Pershing Square's track record lends weight to the move: the fund returned 34% in 2025 versus 17% for the S&P 500, and has averaged 23% annual returns over eight years compared to 14% for the index, as reported by The Motley Fool. The combination of a compressed multiple, a scaling ad business, a substantial buyback program, and cost discipline has made the bear case progressively harder to sustain. For advisors, the episode underscores how tax and goal alignment can influence investment decisions, even for high-profile managers.
