What Netflix’s Stock Recovery—and Ackman’s Mistake—Tells Us

If you want to get under Bill Ackman’s skin right now—without mentioning Harvard University or Business Insider—ask him about his Netflix bet of 2022. The hedge fund manager’s decision in late January of that year to jump into Netflix’s stock, just as it was getting pummeled by investors unhappy with its growth slowdown, would prove to be a multilevel disaster. Not only did Ackman fund the roughly $1.1 billion purchase by liquidating interest rate hedges—which meant forgoing profits from rising interest rates, he acknowledged—he lost faith in Netflix in just three months and sold in April at a loss. Given how much interest rates skyrocketed after Ackman liquidated those hedges, he lost on both counts.

Today Netflix stock has recovered to more than $490, about 33% above where the stock was trading when Ackman bought in. If he’d held on to the stake, he would now have a profit of around $375 million. This trip down memory lane isn’t meant to remind the world of Ackman’s missteps. He was hardly the only person who sold out of Netflix at the time—the stock kept falling for months after he exited, to a low of $167. The point is how difficult it is to predict the future, particularly when it comes to stock movements. While it was clear in mid-2022 that the market had overreacted to Netflix’s slump, it wasn’t obvious the stock would bounce back as much as it has. (And we should note it is still well below its all-time high of around $690 in late 2021.)