He’s back! Bill Ackman of Pershing Square Capital Holdings is back in shares of Netflix (NASDAQ:NFLX | NFLX Price Prediction), the video streamer that Ackman fumbled the ball on more than four years ago, locking in a quick, hefty loss.
Of course, it might be a bit unfair to judge the man based on his losers, especially considering how many more big winners he has. But, at the same time, questions linger as to whether the second act of Mr. Ackman’s big Netflix bet will go well or if it’ll just continue to act as a falling knife that brings forth nothing but pain in the near term.
Looking back, Ackman would have been just fine had his fund held on for the ride, even if it meant suffering a greater immediate fall. Any way you look at it, I think the odds heavily favor Ackman this time around, especially considering the business tends to always find a way to bounce back.
Netflix stock is getting absurdly cheap again
And with a very modest price of admission — 24.6 times trailing price-to-earnings — even after the shares shot up on news that Pershing Square is back in the name (the Bill Ackman premium still exists, seemingly), I think it’s time to ponder whether now represents a good time to get back into one of the original members of the “FANG or FAANG” basket.
Even though Netflix wasn’t quite magnificent enough to make the jump from FAANG to the Magnificent Seven, as each one of its FAANG peers did, I do think that the firm has plenty of levers it can pull to make up for lost time.
Undoubtedly, there’s one common theme for the Mag Seven these days: it’s AI. And while Netflix feels like the non-AI play of the basket, I do think that it may very well be one of the better AI monetization plays when you consider how well AI can play into the production of video content.
Of course, that’s not to say AI content will outnumber human content at any point in the near- or even distant future. That said, there are expensive and time-intensive parts of video production that AI could take care of, from animation to post-production.
Don’t expect Hollywood to embrace generative AI and agents with open arms as fast as the rest of corporate America. But in due time, I do think there’s no stopping Hollywood’s transformation as firms look to better utilize the technology.
Could AI transform the streaming game?
Legendary director Christopher Nolan, behind several epics, including The Odyssey, thinks that AI is an obvious glass “Trojan horse.” And he’s definitely not wrong. As AI takes a backstage, behind-the-curtain kind of “invisible” role (think ad recommendations, editing, rather than AI actors like Tilly Norwood), I do think that the AI impact on film could have the potential to be considerable, even amid tremendous backlash against “AI slop.”
Any way you look at it, viewers are going to stay hyper-aware of any potential uses of AI. But, in my view, it’s going to get harder over time to tell the difference. And with that in mind, I do think that Netflix and other producers are going to really start putting the technology to work in a way that improves operating economics.
I guess the big question is what happens when backstage AI moves closer to center stage. Time will tell. Either way, I do think Netflix’s next big growth and margin-expansion act could lie in increased utilization of the technology.
The bottom line
In more ways than one, the Netflix of 2026 is a far better company than the Netflix of early 2022. As Ackman put it, the firm has pretty much “won the streaming wars.” With the ad-tier humming along and a long-term AI catalyst, I do think that Ackman will probably walk away a winner from his latest bet, even if it means putting up with more near-term pain. The shares just look too cheap to pass up, even what troubles Netflix, most notably slowed growth, weighs it down for a while longer.
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