Netflix shares are cratering after the streaming service reported its first subscriber decline in more than a decade, and investors who held significant stakes in the company could be faced with steep losses. One notable Netflix investor is Pershing Square's Bill Ackman, who scooped up more than 3.1 million shares following a January sell-off. His big purchase made him a top-20 shareholder. It's unclear if Ackman had already dumped his stake before Wednesday's rout, and his average purchase price was not disclosed. A spokesperson at Pershing Square declined to comment. Still, in Pershing's 2021 annual letter released last month, Ackman said he's confident in Netflix's long-term outlook despite the likely volatility in the near term. "Over the next decade, we estimate the company can achieve double-digit annual revenue growth, significantly expand its operating profit margins, and grow its earnings per share by more than 20% per year," Ackman said in the letter. However, Netflix analysts are not so sure if the streaming company can bounce back from a disappointing quarter. At least 10 different Wall Street firms cut their ratings on the stock, including two that issued rare double downgrades. Shares of Netflix fell 35% — for their second-worst day on record — as investors reacted to the report. Netflix executives said they are exploring a crackdown on password sharing and adding advertising as a way to offset slowing growth. Other hedge funds that owned significant Netflix stock as of the end of 2021 included a couple of so-called Tiger Cubs, protégées of the legendary hedge fund pioneer Julian Robertson. Chase Coleman's Tiger Global Management, Lee Ainslie's Maverick Capital and Philippe Laffont's Coatue Management all held sizeable stakes in Netflix. To be sure, they could have sold all or portions of the shares during the first quarter.
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Netflix shares are cratering after the streaming service reported its first subscriber decline in more than a decade, and investors who held significant stakes in the company could be faced with steep losses.