William Ackman’s Hedge Fund Takes Stake in Netflix

“I have long admired

Reed Hastings

and the remarkable company he and his team have built,” Mr. Ackman said of Netflix’s chairman and co-chief executive in a tweet Wednesday. “We are delighted that the market has presented us with this opportunity,” he wrote. Mr. Ackman was complimentary of the company’s business model in a letter included in his tweet and gave no indication that the investment would be an activist position.

Pershing Square’s stake equals about 0.68% of the Los Gatos, Calif.-based company, based on roughly 455.8 million diluted shares outstanding at Dec. 31.

Netflix declined to comment.

Shares of Netflix rose 4% in after-hours trading following news of Pershing’s investment. Through Wednesday’s close, the stock was down about 40% for the year. It closed Wednesday at $359.70, compared with a high of $691.69 on Nov. 17.

While he made his name as an outspoken activist at companies like

Herbalife Nutrition Ltd.

HLF -0.60%

, Mr. Ackman for the past several years hasn’t taken activist positions and instead has focused on friendlier investments in well-known companies like

Domino’s Pizza Inc.

DPZ -2.90%

He also raised a record-size blank-check vehicle that lined up a complex deal to take a stake in

Universal Music Group

UMG -1.46%

before backing off the plan after pushback from regulators. He has since said he is exploring other potential deals.

Netflix’s recent stock decline came after the company said last week that it missed its subscriber estimate for the fourth quarter, adding 8.3 million subscribers instead of the projected 8.5 million. Netflix said it expects to add a much smaller number of subscribers this quarter than it did a year ago as it contends with a crowded streaming marketplace and ongoing disruptions from the Covid-19 pandemic.

Netflix earlier this month also raised the price for its monthly plans for customers in the U.S. and Canada, the first such increase since 2020. It cited increasing programming costs as the primary reason.

Growth in the U.S. has slowed for Netflix in recent years, and it is focusing much of its efforts overseas. It also is looking in its rearview mirror more as

Walt Disney Co.

DIS -2.13%

’s Disney+ and other newer streaming services are competing for subscribers and content.

Although investors were disappointed with Netflix’s recent results and forecast, it is still by far the streaming leader with 222 million paid memberships. In 2021, the company had $29.7 billion in revenue and net income of $5.1 billion.

Another well-known activist,

Carl Icahn,

held a big Netflix stake for years and made around $2 billion in profit when he cashed out of it in 2015, making it one of his best bets ever. He first took a stake in 2012 at the urging of his son and planned to call for the company to explore a sale.

But then he met with Mr. Hastings, who arranged for a private showing of the soon-to-debut “House of Cards” drama starring Kevin Spacey, the streamer’s first original series. After seeing it and understanding Mr. Hastings’ vision, Mr. Icahn decided against the sale idea and abandoned his plans for activism.

—Joe Flint and Cara Lombardo contributed to this article.

Write to Denny Jacob at denny.jacob@wsj.com