Icahn buy sees Netflix surge
November 1, 2012
Netflix’s stock surged yesterday as ‘active investor’ Carl Icahn revealed that his funds have acquired a 10 per cent stake in the business. Netflix shares actually tripped two circuit breakers in their rapid rise, triggering a temporary suspension of the stock. When shares resumed trading, they finished the day up around 14 per cent.
Icahn said in a filing that his funds have directly acquired or taken out options on 5.5 million shares.
Icahn, once a famed ‘corporate raider’ thinks Netflix has “significant strategic value” for “a variety of significantly larger companies that are engaging in more direct competition with one another due to the evolution of the internet, mobile, and traditional industry.” In other words he thinks an Amazon or Verizon or Microsoft etc. will someday (maybe soon) come calling and he’s the one to make the deal.
Last week, Netflix shares plunged 16 per cent on a third-quarter earnings report full of bad news: The company offered weak guidance for the current quarter, and reported figures for new streaming subscriptions that fell well short of expectations.
Over the first three quarters of 2012, Netflix added just 3.4 million new U.S. streaming subscribers, far short of its previously announced goal of signing up 7 million new U.S. subscribers this year. CEO Reed Hastings recently called the projection “a forecasting error,” and said a target of five million was more realistic.