Billionaire financier Carl Icahn has set his sights on streaming video giant Netflix, taking a 10 percent stake in the company, according to an SEC document filed today.
Netflix has come under fire from shareholders for a number of reasons. The company is currently dumping all of its profits into international expansion, spending lots of money on content licensing (including the cost of producing its own HBO-quality shows), and facing increased competition from Amazon’s Prime Instant Video service, Hulu, and a new joint venture between Verizon and Redbox. That’s caused its stock price to drop over the last several quarters because investors see it as a very big risk. That’s despite Netflix mostly following through on all its proposed strategy thus far.
The SEC filing shows that Icahn owns about 5.4 million shares of Netflix at a cost of $168.9 million. News of Icahn’s stake gave Netflix stock a boost, with the current price up 14 percent at the time this article was published.
“Netflix may hold 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,” Icahn states in the filing regarding his reason for purchasing a stake. He doesn’t provide any insight for how Netflix might become more valuable for shareholders but did indicate that it’s been discussed.
Icahn has a history of shaking up board of directors from companies he’s invested in. At this point it’s unclear exactly what he thinks Netflix should be doing, but I’m sure it won’t be long before we all find out. It’s hard to think that he’d stray too far from the current strategy Netflix CEO Reed Hastings is following, which, as VentureBeat has previously pointed out, involves concentrating on international markets instead of fighting rival video services domestically.
VB's research team is studying web-personalization... Chime in here, and we’ll share the results.