Obtaining content from other providers and creating your own original programming doesn’t come cheap. Netflix has announced that it will be raising $400 millin in debt, presumably to fund further expansion and content acquisition.
The company will offer $400 million in notes to qualified buyers. More than half of the amount raised will pay off existing debt the company has acquired.
Wedbush analyst Michael Pachter believes that the plan is a good one because it ”will likely provide interest rate relief and temporary breathing space from hefty content deals.”
Pachter still thinks Netflix is not a great long-term choice for investors, however:
“Netflix’s newest capital raise reflects the continuing cost escalation of its streaming business . . . We believe that lack of free cash flow and the risk incurred by increasing debt makes Netflix a risky investment.”
Would you call Netflix a risky investment, especially considering the love its stock has received from Wall Street lately?
[via The Hollywood Reporter]