Jaap Arriens/Associated Press
Netflix said it is planning to raise $2 billion from an offering of bonds (mostly in euros and U.S. dollars) to qualified institutional buyers.
The debt raised by the offering will be used for “general corporate purposes,” including content production, acquisition and development. The company said the interest rate and maturity of the bonds will be set at a later date.
The companys stock price, which has risen more than 60% in 2018 to date, dropped more than 1% in early trading to around $329.
Netflixs long-term credit rating at Moodys is Ba3, which is considered junk. While many Wall Street analysts have high esteem for the companys shares, especially after its latest earnings report last week, many skeptics question its strategy of spending aggressively and booking losses even as it gains more subscribers.
The companys annual spending on content has risen past $12 billion, dwarfing that of its competitors, and it put nearly 700 hours of original programming on its platform in the third quarter. That represented a 50% spike from the second quarter.
In a report ahead of the third-quarter earnings beat, Cowen & Co. analyst John Blackledge
“Netflixs investment in high quality episodic content across all genres and feature films likely ensures the top spot in the living room over time,” he wrote. He predicted the flood of new originals would propel the quarter, including high-profile titles like Bojack Horseman and Maniac.
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