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Netflix stock soars on news of Icahn’s 10% stake

Netflix Inc.’s stock price soared 14 percent after it was revealed that Carl Icahn had bought 5.5 million shares.
Robert Galbraith/Reuters/File
Netflix Inc.’s stock price soared 14 percent after it was revealed that Carl Icahn had bought 5.5 million shares.

SAN FRANCISCO — Netflix’s slumping stock price and weakening financial performance have attracted an opportunistic and sometimes nettlesome investor: Carl Icahn.

In a Wednesday regulatory filing, Icahn revealed he had used some of his $14 billion fortune to accumulate a 10 percent stake in Netflix Inc.

The documents did not disclose why Icahn and his investment funds have been buying 5.5 million Netflix shares since early September, but investors familiar with his cage-rattling history assumed that the billionaire would press the owner of the world’s largest Internet video subscription service to make dramatic changes to boost its stock price. That hunch caused Netflix’s stock price to soar $9.66, or nearly 14 percent, on Wednesday to close at $79.24.

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In a Wednesday interview, Icahn said he simply believes Netflix is worth a lot more than most investors think it is.

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‘‘I think the company is very undervalued on its own,’’ Icahn said. ‘‘There is a secular change in industry and they are the perfect platform for it. But I also­ believe that they might be a very enticing acquisition candidate. That would just be a bonus for shareholders if a large premium was paid.’’

Netflix has long been the subject of takeover rumors, with speculation typically centering on Amazon.com Inc., ­Apple Inc., Microsoft Corp., and Google Inc. as the most likely buyers. Netflix declined to comment on Wednesday.

Icahn, 76, has a long history of building up large stakes in troubled companies and then pressing them to consider selling themselves, cutting costs, or replacing top executives and board members. In many cases, Icahn has muscled his way onto the boards so he can better promote his agenda.

But Icahn said he is happy with Netflix’s strategy and endorsed chief executive Reed Hastings, whom he unsuccessfully tried to reach Wednesday before disclosing his stake in the company.

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Netflix has been has been stumbling since it raised its US prices by as much as 60 percent last year. That triggered a backlash that resulted in the loss of hundreds of thousands customers and raised concerns on Wall Street that Hastings would have trouble paying for an ambitious plan to expand the company’s service into dozens of other countries.