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Home / Technology / Netflix plans to raise another $ 2 billion

Netflix plans to raise another $ 2 billion



The streaming service announced Monday that it plans to raise $ 2 billion in new debt by offering unsecured banknotes.
The money is used for "general business purposes". Netflix (NFLX) says that, along with other investments, this could include content acquisitions and production costs.
It's the third time in a year that Netflix has made debt this way. Last October, the company offered $ 1.6 billion. There was another round in April for $ 1.9 billion.
The news follows a great quarter for Netflix. The company announced last Tuesday that it has more than 137 million subscribers, of which some 130 million are paying for the service.
But Netflix knows it has to spend a lot of money if it wants to be at the top. The market for streaming services gets incredibly crowded. Next year heavyweights like Disney (DIS) and AT & T (T) WarnerMedia will be offering their own services. (AT & T owns CNN.)

A new contest also means that Netflix will likely have less licensed content to round off its library. Disney, for example, has said that it extracts its content from Netflix before releasing its service.

Netflix's strategy is to increase the amount of original content it produces and distributes, resulting in some impressive results. The company said last year it expects to spend approximately $ 8 billion on content in 201
8. Analysts at research firm Cowen say the company could actually spend $ 13 billion on content this year.

There are some big investments with this money. Netflix recently poached TV giants Shonda Rhimes and Ryan Murphy for exclusive content, for example.

Netflix said it expects negative free cash flow of approximately $ 3 billion this year and expectations for next year are similar. Free cash flow measures how much cash is generated after the company has invested in its business.

Netflix shares rose 8% the day after last week's earnings announcement, but the price has since fallen again. 19659009] Moody's has issued the latest BA3 or "junk" rating, but added that Netflix could eventually pay off its debts as the transition from licensed content to original content would be removed and newer international markets would help The results show that Netflix's strategy of building its own original content library "has positive long-term implications," adding that a library of proprietary content, rather than just licensed content, is valuable to both consumers and investors.

There are risks, however. Moody & # 39; s said it could further downgrade Netflix if the negative cash flow is still high or if competition undermines its subscriber base.


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