MarketWatch reported that Icahn, a major investor at Yahoo! Inc. and Motorola, had been looking for companies he believed were undervalued. He bought 5.5 million shares of Netflix, which rents DVDs and presents movies online for downloads.
In documents filed with the Securities and Exchange Commission, Icahn Capital said Netflix was undervalued.
Its shares jumped 14 percent Wednesday as Icahn's purchase became public.
Icahn is known as an activist investor, in part due to his propensity to find undervalued stock, buy major shares of a company and then force the board to sell parts of the business that are nor performing as he feels they should.
In the regulatory filing, the investment firm said Netflix could well be a target for a takeover.
"We believe 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 said.