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The Thesis
After Netflix's Qwikster debacle crashed the stock 75%, Icahn recognized the streaming business was still growing rapidly and bought heavily at the bottom.
The Story
In late 2012, Carl Icahn disclosed a 10% stake in Netflix at around $58 per share. The stock had crashed from $300 to under $60 following the disastrous Qwikster split and massive subscriber losses. Wall Street had largely written Netflix off. Icahn, the legendary activist, saw it differently: the streaming subscriber numbers were actually still growing, content spending was attracting viewers, and the stock was pricing in permanent impairment.
Within two years, Netflix stock had risen more than 10x from Icahn's entry point. He sold most of his position for over $2 billion in profit, one of his most successful investments ever. The trade was pure contrarian value investing — buying a hated stock when the fundamentals told a different story than the headlines.
Key Insight
When a stock crashes on narrative but the core metrics are still growing, the divergence between story and reality creates opportunity.
“You learn in this business: if you want a friend, get a dog.”
Carl Icahn
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