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Shares in the streaming giant surge almost 14 percent after the activist investor makes a big buy and declares the stock undervalued

Icahn Nabs 10% of Netflix

Jeff Baumgartner
LR Cable News Analysis
Jeff Baumgartner
10/31/2012
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Shares in Netflix Inc. (Nasdaq: NFLX) jumped almost 14 percent Wednesday after billionare activist investor Carl Icahn disclosed that his firm had taken an almost 10 percent stake in the video streaming and DVD rental company.

Icahn revealed the accumulation of 5.54 million shares, good for a 9.98 percent stake in Netflix, in a Securities and Exchange Commission (SEC) filing, holding that Netflix's stock is undervalued and could become an attractive target for larger companies.

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," the filing noted. "The Reporting Persons are considering ways for the Issuer to maximize shareholder value but have reached no conclusion."

Among recent rumors, Microsoft Corp. (Nasdaq: MSFT) has emerged as a potential suitor for Netflix.

Icahn is jumping in more than a year after Netflix stock was riding sky high, cresting at $304 last July. The stock has come back to earth following a series of misfires by Netflix, including a decision to split off its video streaming and DVD rental business, only to quickly reconsider the idea and then raise prices, a move that brought on a brief subscriber defection. (See Netflix Loses 810,000 Subs , How Far Will Netflix Fall? , Netflix Kills Qwikster and Netflix Does the Splits .)

Among recent stumbles, Netflix admitted that it will not hit its goal of adding 7 million new U.S. streaming subs in 2012. It ended the third quarter with 25.1 million U.S. streaming customers, and 4.3 million international subs. (See Netflix Sinks as It Cuts Q4 Subscriber Forecast .)

Netflix shares closed Wednesday at $79.24 each, up $9.66 (13.88 percent). It was down $0.98 (1.24 percent) to $78.26 each in after-hours trading early Wednesday night.

— Jeff Baumgartner, Site Editor, Light Reading Cable



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gtchavan
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gtchavan,
User Rank: Light Beer
12/5/2012 | 5:18:23 PM
re: Icahn Nabs 10% of Netflix


The man is amazing! Just last year he picked up Amylin in low 10's and sold it for mid thirties to Bristol less than a year later. I wonder who will he buy this pig after he puts the lipstick on it. 

dr500
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dr500,
User Rank: Light Beer
12/4/2012 | 9:54:27 AM
re: Icahn Nabs 10% of Netflix
I agree!
Ashok_Santhanam
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Ashok_Santhanam,
User Rank: Light Beer
12/4/2012 | 4:50:04 AM
re: Icahn Nabs 10% of Netflix

Icahn Nabs 10% of Netflix - Interesting!!!

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