Netflix (NFLX) shares climbed as much as 4.7% on Thursday morning after Bill Ackman's Pershing Square Capital Management disclosed a new 3.15 million-share position in the streaming company. By mid-morning, the stock was still up about 3.5%, trading near $76.91.

The disclosure appeared in Pershing Square's semiannual report, released Wednesday evening. The stake represents 4.9% of the hedge fund's portfolio.

Pershing Square is known for maintaining concentrated positions in a relatively small number of companies, typically fewer than a dozen at a time, and for taking activist stances or making high-conviction bets on mature, profitable businesses. That approach makes the Netflix holding a notable endorsement.

In its letter to shareholders, the fund said, "Netflix has since effectively won the streaming wars," and said it expects the company to "compound revenue at a double-digit growth rate, with content costs growing more slowly than revenue, driving continued margin expansion." Pershing also described Netflix's valuation as a "substantial discount," calling it "highly attractive in terms of business quality and prospective earnings growth." The "streaming wars" characterization comes as rivals including Disney+, Amazon Prime Video, Max, and Apple TV+ have spent heavily on content with mixed profitability outcomes, while Netflix has maintained the largest global subscriber base.

The investment is especially notable given Pershing Square's prior history with the stock. The firm invested more than $1 billion in Netflix in early 2022, then exited months later at a loss of more than $400 million.

Netflix shares have fallen roughly 42% to 50% from their June 2025 highs, weighed down by a failed attempt to acquire Warner Bros. Discovery, reports of other unsuccessful deal talks, and concerns about user engagement.

Despite the share-price decline, Netflix has continued expanding its business model. Its ad-supported subscription tier is gaining traction, with U.S. Upfront advertising commitments for 2026 nearly doubling year over year. Ad-supported plans have become a standard offering across major streaming platforms as the industry pivots toward a dual revenue model blending subscriptions and advertising. Netflix is targeting about $3 billion in ad revenue in 2026, and the tier is increasingly viewed as a second revenue engine.

Netflix has also expanded into live sporting events, which is helping it reach viewers it historically did not attract. The company said this broadens its audience base without requiring a large increase in content costs.

Valuation remains a central part of Pershing's argument. Netflix currently trades at 24 times earnings, well below its three-year average multiple of 43. For a company still posting double-digit revenue growth and expanding margins, Pershing said that gap is significant.

The broader market was little changed on Thursday, with the S&P 500 up 0.2%, the Dow up 0.2%, and the Nasdaq up 0.1%. Netflix outperformed all three indexes after the company-specific disclosure.

One remaining overhang is that Netflix's CEO and CFO both sold stock in early August. Analysts also flagged slightly slower revenue growth in Q3 guidance following the company's Q2 earnings report.

Even so, Netflix's ad-supported tier remains on track to surpass $3 billion in revenue this year, with U.S. Upfront commitments nearly doubling year over year.