Shares of Netflix (NASDAQ:NFLX) are enjoying a generous gain of over 8% today. The streaming giant recently reported Q4 earnings that sent NFLX stock spiraling downward to prices not seen since April 2020. While Netflix’s Q4 revenue of $7.71 billion was in line with consensus estimates, subscription guidance for Q1 is what really hurt NFLX stock. Netflix estimated new paid subscribers for Q1 to be 2.5 million, which was below estimates of 6.93 million new subscribers by a wide margin. However, Netflix CEO Reed Hastings is now taking advantage of Netflix’s recent decline.
CEO Reed Hasting Buys 50,000 Shares of NFLX Stock
In a Form 4 received by the U.S. Securities and Exchange Commission (SEC) last Friday, Reed Hastings purchased 50,000 shares of NFLX stock at prices ranging from $375 to $393 per share. In addition, the shares were purchased through a trust owned by the Hastings family. The purchase represents the largest insider purchase of NFLX stock within the past year. For context, insiders of Netflix have bought half a million shares of NFLX, while selling 1.6 million shares, during the past year.
Company insider buying is extremely useful to track. When an insider buys stock, it is only for one reason: the insider believes the stock will go up. In contrast, insiders can sell stock for a variety of reasons that are unknown to retail investors.
Hastings’ recent purchase is certainly great news for Netflix bulls. However, Hastings isn’t the only prominent figure that has picked up NFLX stock in recent days.
Pershing Square Adds 3.1 Million Shares of Netflix
Last Wednesday, Bill Ackman announced that his hedge fund, Pershing Square, had purchased 3.1 million shares of NFLX stock. Assuming that Pershing Square purchased the shares near Wednesday’s closing price of $360, the transaction would amount to well over $1 billion. After the purchase, Pershing Square is now a top-20 shareholder of NFLX stock.
Ackman also released a letter detailing his rationale behind the purchase. For example, Ackman is highly supportive of Netflix’s “industry-leading content” and “best-in-class management team.” Ackman also added that Netflix’s recent price decline from its Q4 earnings allowed Pershing Square to purchase Netflix “at an attractive valuation.”
Ackman’s and Hastings’ purchases have certainly helped Netflix recover from its earnings decline. NFLX stock is now trading 15% higher than last Wednesday’s closing price of $360.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
