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In April, Netflix sold $ 1.6 billion of debt after raising $ 1.9 billion in November 2017, bringing the total debt to $ 8.4 billion, most of which was raised during last three years. Its long-term debt as a percentage of total capital has almost doubled to 65% since the end of 2014.
Netflix seeks to replicate the success of original series such as Stranger Things.Credit:Netflix
Last week's record quarterly results, driven by the rise in the number of international subscribers, again eased fears that the global streaming leader lacks room to expand into developed markets, where it can target a public mass at profitable prices.
But while Netflix still has huge potential in emerging markets such as India, some brokerages have begun to draw attention to the generally high cost it pays as a company to attract more users .
"This is further evidence of Netflix's need for capital to finance short-term operations and content investments," said Richard Miller, founder and managing partner of Gullane Capital.
"It shows that they are further than ever to be positive," he said.
Netflix's existing debt prices fell globally on Monday, the largest declines in a bond maturing in 2026, falling by about 3 cents to reach 91.5 cents per dollar.
Its Eurobond maturing in 2028 also fell nearly 3 cents to 91.95 cents per dollar.
The bearish bets on Netflix's $ 8.4 billion bad-rating bonds have more than tripled this year to a record $ 347 million, Reuters reported last week.
Purchase note
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Some 27 of the 43 brokerage analysts who cover Netflix continue to support stocks with "buy" ratings, compared with only three with "sell" ratings, although its shares have fallen since last week's results .
This shows that most respondents left him in doubt about the lack of subscribers in the second quarter and that the company has also reduced its negative cash flow forecast to nearly $ 3 billion compared to an earlier forecast of less than $ 4 billion. USD.
Moody's Investors Service has assigned a rating of Ba3 to the new notes, either three notches on the junk territory, or the same rating that the agency has awarded to the company as a whole.
Standard & Poor's assigned to the proposed issue a recovery note "BB-" and "3". The recovery note indicates a significant recovery of approximately 65% of the capital in the event of default.
The rating reflected the improvement in the company's underlying profit margins over the past 12 months, primarily due to higher prices and growth in the number of subscribers.
"These factors demonstrate the strength of the company's business model and its ability to grow globally, increase margins and manage its growing debt," said S & P.
The new debt will be in the form of senior bonds denominated in dollars and euros – securities that the company will have to repay before any unsecured debt in the event of bankruptcy.
The company is now trading at nearly 115 times its futures earnings, making it the second-most expensive cost of the big tech betting group FAANG, after that of Amazon.com 160 times, according to data from Refinitiv.
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