Key Facts

Bill Ackman's Pershing Square sold its entire Alphabet stake in Q2 and opened a new position in Netflix.

Netflix is trading at $78.25, down 42% from its June 2025 high of $126.71.

Alphabet reported negative free cash flow for the first time as a public company and raised 2026 capex guidance to $200 billion.

Wall Street has a "Moderate Buy" consensus on Netflix with an average price target of $96.65.

Netflix gained 13% in August after hitting a 52-week low, with institutional investors owning roughly 81% of the stock.

The Trade

Bill Ackman's Pershing Square made a notable portfolio switch in the second quarter, exiting its entire position in Alphabet and adding Netflix instead. The move signals where one of the world's most prominent hedge fund managers currently sees value. The position changes come from the firm's quarterly 13F filing with the SEC, which discloses equity holdings as of quarter-end and is closely watched by investors for signals from major funds.

Netflix, Inc. (NFLX)

Netflix opened at $82.67 on Friday and is currently trading at $78.25, sitting 42% below its June 2025 record high of $126.71. The 12-month low is $65.08. Despite the selloff, Ackman views the stock as too cheap to pass up.

The market pushed Netflix down after the company lost bidding wars for both Warner Bros. Discovery and Roku, raising concerns about its growth ceiling. Those assets were widely seen as potential scale boosters in a streaming industry that has been consolidating, with larger players seeking content libraries and distribution reach. The fundamentals, however, remain strong: Netflix leads all subscription streaming services in monthly active users, revenue, retention, and TV viewing time.

In its most recent quarter, Netflix reported earnings per share of $0.80, beating estimates by $0.01. Revenue came in at $12.56 billion, up 13.4% year over year. Net margin stands at 28.22%, with a return on equity of 40.02%.

Wall Street expects earnings to grow at 21% annually over the next three years. At a P/E of around 24.7, the stock trades cheaply relative to that growth. The consensus price target of $96.65 implies roughly 24% upside from current levels.

NEOS Investment Management increased its Netflix position by 10.2% in Q2, adding 300,145 units for a total holding valued at approximately $230.6 million. Institutional investors now own about 80.93% of the stock.

Analyst Targets and Ratings

Wolfe Research raised its price target from $84 to $95 and kept an "outperform" rating. Morgan Stanley reiterated "overweight" with a $90 target, while UBS maintained "buy" with a $115 target. On the other side, China Renaissance cut its target to $80 with a "hold" rating, and Seaport Research Partners downgraded from "buy" to "neutral."

The overall consensus sits at "Moderate Buy," with 4 Strong Buy ratings, 34 Buy, 16 Hold, and 1 Sell.

Why Ackman Walked Away From Alphabet

Alphabet posted strong Q2 numbers. Revenue rose 24% to $120 billion, and GAAP operating income jumped 31% to $41 billion. Google Cloud revenue surged 82%, its fifth consecutive quarter of acceleration.

The red flag was cash flow. Alphabet reported negative free cash flow for the first time ever as a public company. The company also raised its full-year capex guidance to $200 billion, up from $91 billion last year. That level of spending is part of a broader AI infrastructure buildout across large tech companies, as heavy investment in data centers and computing capacity pressures near-term cash generation industry-wide. That level of spending raises questions, and Ackman apparently did not want to wait for the answers.

Alphabet stock fell after its Q2 report and was still trading 2% below pre-report levels as of September 4.

Netflix gained about 13% in August after touching its 52-week low. The stock's 50-day moving average is $75.43 and its 200-day moving average is $84.44.