In January, the investor poured more than $1 billion into the company just days after its disappointing first-quarter subscriber forecasts caused Netflix to drop sharply. Now, after failing to meet those poor expectations and surprising with the loss of 200,000 subscribers, the fund manager has chosen to turn his back on a company that he had showered with praise just a few weeks earlier.
In a brief statement announcing his decision, Ackman says that the proposed changes to the business model, such as adding advertising and going after non-paying customers, make sense, but will make the company too unpredictable. short term.
At least a dozen analysts were quick to temper their views on a stock that has been an outstanding performer in recent years.
“Netflix is an example of what happens to growth companies when they lose their growth,” said Kim Forrest, chief investment officer at Bokeh Capital Partners in Pittsburgh.
“People buy growth companies because they think their cash flow is going to grow, so they pay up front to anticipate that. When a stock like this falls, people looking for growth quickly pull out,” he added.
JP Morgan bank was the most aggressive in halving its price target to $305. well below Wall Street’s median target of $400.
“Near-term visibility is limited … and there is not much to be excited about in the coming months beyond the new, much lower share price”said JP Morgan analyst Doug Anmuth.
Anmuth also cut his estimate for the number of net subscribers in 2022 in half, to 8 million.
The stock slump could erase the gain of the last two years, when his business prospered as new customers joined his platform to weather the lockdowns.
Source: Ambito
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