Billionaire Investor Buys Netflix Stock's Post-Earnings Selloff

The move makes the hedge fund a top 20 shareholder

Deputy Editor
Jan 27, 2022 at 9:38 AM
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FAANG name Netflix Inc (NASDAQ:NFLX) is seeing some redemption this morning, after billionaire investor William Ackman decided to take advantage of the stock's massive post-earnings pullback and purchase 3.1 million shares, which amounts to nearly $1 billion. In a letter to Pershing Square Capital Management, his hedge fund clients, Ackman said the hedge fund was now a top 20 shareholder. 

The stock was last seen up 5.6% to trade at $379.92, as it distances itself from its almost two-year lows. In fact, the equity notched its lowest close since March 2020 -- an infamously low time for markets -- just yesterday, settling at $359.70. NFLX still has a way to go, as the shares dropped over 30% in just one week of trading, putting them at a year-over-year deficit of 35.9%. 

Last week's disappointing subscriber growth was the straw that broke the camel's back, and brought on a deluge of bear notes. These continue to trickle in, despite today's news, by way of a price-target cut from Rosenblatt Securities to $400 from $450. The brokerage bunch left this earnings event split, as 15 of the 29 covering NFLX still consider it a "strong buy," and 14 say "hold" or worse. Meanwhile, the 12-month consensus price target of $532.23 is a lofty 48% premium to last night's close. 

Options traders rushed NFLX last week, with bears piling on. A broader look shows the stock sporting a 50-day put/call volume ratio of 0.74 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than 99% of readings from the past 12-months. This means that while calls are still outnumbering puts on an overall basis, the latter are being picked up at a much quicker-than-usual clip. 



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