Bill Ackman’s Netflix Bet: Deep Dive into Market Impact and Valuation

Bill Ackman, the star investor of Pershing Square, made a bold move by adding Netflix (NASDAQ: NFLX) shares to his portfolio.

Ackman’s Strategic Rationale

In a letter to his investors, Ackman argues that Netflix has already won the streaming wars. With 325 million subscribers—roughly double the combined total of its two biggest rivals—the platform now trades at a ~21x forward earnings multiple, a steep drop from its previous ~40x valuation.

■Subscriber Base: 325 M (twice rivals combined)

■Forward Earnings Multiple: ~21x (down ~50% from 40x)

■Catalyst for Decline: Collapse of Warner Bros. Discovery deal and growth concerns

Monetization Battlefront

While revenue growth slows, Netflix is shifting focus to monetization. Advertising revenue doubled last year after the launch of its own Ads Suite in the U.S., offering a lower‑priced tier that attracts budget‑conscious households.

■Ad Revenue: +100% YoY

■New Ad Tier: Launched in the U.S., lower‑cost option

■Pricing Landscape: On par with Disney+, Hulu, and HBO Max, but with richer content depth

Bearish Counterpoints and Risks

Critics contend that the streaming market has matured and Netflix’s growth engine is fading. YouTube captured the most U.S. viewing time in 2025 at 12.6%, leaving Netflix at 8.3%. Daily viewing time per subscriber also fell 7%.

■Growth: Q2 revenue +13.4% vs. +17.2% YoY

■Competition: YouTube leader, Netflix runner‑up

■Engagement: Daily watch time –7%

Valuation and Forward Outlook

Analysts see the current ~20x forward P/E as still attractive. Consensus forecasts project $3.82 EPS for FY2027 and $4.58 for FY2028. Long‑term growth catalysts include gaming, live events, and the “Netflix House” experience concept.

■Forward P/E: ~20x

■FY2027 EPS: $3.82

■FY2028 EPS: $4.58

■Future Catalysts: Gaming, live events, physical experience venues

Gökberk Uçar: Ackman’s bet on Netflix underscores the company’s monetization‑centric transformation. The rapid surge in ad revenue and strategic pricing could lift the stock from its low‑multiple base to a near‑term value‑gain scenario. However, declining viewer engagement and intensifying competition may cap long‑term growth rates. Portfolio managers should balance profitability against market volatility, positioning Netflix as a high‑risk/high‑reward asset.