Netflix Inc. shares fell 35.1% on Wednesday, recording their worst day since 2004, after the streaming giant reported that it lost subscribers in the first quarter, reports The Wall Street Journal.
William Ackman, the billionaire investor whose fund bought more than three million shares of Netflix in January, said Wednesday that the fund had sold its stake at a loss. In a letter to investors, Mr. Ackman said Netflix would reduce returns at the fund, Pershing Square, by four percentage points. That implies a loss of around $400 million.
In January, Ackman said Netflix sported an “attractive valuation”; on Wednesday he wrote, “We have lost confidence in our ability to predict the company’s future prospects.”
The shares shed more than a third of their value, finishing down $122.42 to $226.19. The stock was the S&P 500’s worst performer of the day. Investors had expected that the company would add new users in the quarter. Instead, Netflix said it ended the first three months of the year with 200,000 fewer subscribers than it had in the fourth quarter and said it expected to lose two million global subscribers in the current quarter.
Several other streaming stocks fell Wednesday. Paramount Global finished down $3.12, or 8.6%, to $33.16, and Warner Bros. Discovery Inc. was off $1.48, or 6%, to $23.01. Walt Disney Co. retreated $7.33, or 5.6%, to $124.57, while Spotify Technology SA lost $14.92, or 11%, to $122.49.
Meanwhile, The advertising industry welcomed Netflix Inc.’s decision to explore offering a lower-priced ad-supported version of its service, a move that would give marketers a chance to reach younger viewers who have abandoned traditional television.
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