Netflix to raise another $1.5Bn in debt financing

Henrietta Strickland
April 24, 2018

Netflix has announced plans to raise a hefty $1.5 billion through a bond offering and said it will use the proceeds for general corporate purposes, including new content.

With a stock market value of $142 billion and the best-performing stock in the S&P 500 this year, Netflix has often touted its "thick" equity cushion as reason to support its debt.

The new meeting ground for video programming distributors!

During the company's latest earnings call, founder and CEO Reed Hastings mentioned the expansion into movies in particular, giving a shoutout to "The Cloverfield Paradox"-a sci-fi pic that hit the service directly after the Super Bowl". In its letter to investors past year, the company said: "Our future largely lies in exclusive original content that drives both excitement around Netflix and enormous viewing satisfaction for our global membership and its wide variety of tastes". "We expect Netflix to burn cash to fund content acquisition for many years, notwithstanding the fact that it has increased price three times while cash burn continues to grow".

As part of its $8 billion spending this year, Netflix plans to double its outlays for original content production in Europe, according to the Financial Times.

Consumer are apparently loving it.

The announcement comes just a week after the company announced revenues of $3.7bn for its first quarter and 7.4m new subscribers, far surpassing estimates of 6.5m. It also recorded net income of $290 million.

Netflix has been routinely turning to debt for financing its massive content spending instead of raising that through equity markets, because "we believe the debt is lower cost of capital compared to equity", as the company said in its April 16 letter to shareholders.

Other reports by Click Lancashire

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