Bill Ackman Rebuilds Netflix Position, Calling Shares Underpriced Despite Falling Watch Time

Pershing Square Capital Management founder and CEO Bill Ackman defended his fund's renewed investment in Netflix, characterizing the streaming platform as "an incredibly cheap stock" following a 55% drop from its June 2025 peak, according to commentary on CNBC's Squawk Pod reported by Yahoo Finance via TIKR (https://www.tikr.com/blog/bill-ackman-netflix-an-incredibly-cheap-stock-after-a-55-drop-but-is-he-right?ref=yahoofinance&tlnk=yf-261104-45q98v96&.tsrc=rss). Ackman stated that Pershing Square bought back into Netflix this year after exiting its previous position in 2022, while liquidating most of its holding in Google parent Alphabet.

Ackman's thesis centers on what he views as Wall Street's misplaced fixation on aggregate user time on the platform. Average watch hours have slipped not because customer loyalty is eroding, Ackman argued, but because the streamer is shifting its programming structure toward events that drive subscriptions without requiring hundreds of hours of passive viewing.

The valuation debate comes as independent data points show a measurable contraction in user attention. Average viewing time per account holder dropped 26% over the past three years, according to metrics cited by Ed Elson on the Prof G Markets podcast. Viewership figures from Puck analyst Julia Alexander, cited on the Animal Spirits podcast, show Alphabet's YouTube platform generating double Netflix's share of viewing time. Commentators such as Animal Spirits co-host Ben Carlson noted that while Netflix's churn remains modest relative to competitors, any conversion of reduced screen time into subscription cancellations would pose severe downside risks.

Valuation figures compiled by TIKR show Netflix trading at approximately 17 times forward earnings, roughly half of its five-year average multiple of 32 times and well below late-2021 levels that reached nearly 60 times. Wall Street consensus projections anticipate normalized earnings per share rising from $2.53 in 2025—a figure augmented by a $2.8 billion termination fee collected after dropping a bid for Warner Bros. Discovery—to $4.51 by 2028. Free cash flow expanded from a modest deficit in 2021 to $9.5 billion in 2025, with management targeting approximately $12 billion for the current fiscal year.

Netflix's internal disclosures provide context for the divergence between user hours and customer acquisition. Management indicated that live programming represents slightly over 5% of its annual content budget and roughly 1% of total viewing hours, yet live broadcasts generated six of the platform's ten largest sign-up days over the past five years.

Subscriber behavior has so far defied bearish expectations of mass cancellations. Netflix reported that customer churn improved year over year in the third quarter across both domestic and international markets, despite implementing price increases between 8% and 13% in the United States in March. Third-quarter revenue in the U.S. and Canada climbed 11%, aligning closely with the pace of those price hikes, even as consensus estimates for 2027 earnings per share were trimmed by 4.3% to $3.77 since late September 2025.

The durability of Ackman's thesis faces its next concrete benchmark in January, when Netflix is scheduled to release its formal 2027 revenue and margin guidance alongside its comprehensive annual viewing report.