Netflix Shares Edge Higher On New Bonds

netflix shares

Netflix shares are trading slightly higher during the pre-hours trading on Tuesday after it announced that it plans to raise around $1.6 billion from its investors as it looks to increase its investment in the production of original shows. Reportedly, the company also plans to use this increased investment to make a number of acquisitions in the coming year.

The bonds deal will be Netflix’s biggest issuance since May where it issued around $1.53 billion worth of bonds.

The company which would be planning to issue high-yield bonds worth $1.6 billion has recently delivered its third-quarter earnings report that beat most analysts estimates. For the third quarter, the American streaming service company posted an additional 5.3 million subscribers sending its shares to an all-time high last week. Investors initially expected an additional 4.5 million subscribers for the third quarter. Netflix’s overall subscribers are now at around 109.3 million globally.

Netflix also posted earnings of 37 cents per share compared to analysts estimates of 32 cents per share while their revenue amounted to $2.98 billion slightly beating analysts expectations of $2.97 billion.

Also earlier this month, the company announced that it would be increasing the price of their monthly subscription for their standard subscription that offers high definition viewing of their content.  Netflix who stated that the price increase might go by as much as 17% in the United States and in the United Kingdom.

Netflix stated then that this will be a part of their efforts in increasing their investment allocation for the production of original films and series. From their plans to spend $6 billion in the creation of original content this year alone, Netflix is looking to increase it by another billion to $7 billion or more by 2018.

The company has been increasing these investments due to the growing competition from other streaming companies and content providers such as Hulu and YouTube. Starting 2019, Disney will also be pulling all of its content from the application which is when the contract between the two companies will expire. Disney, on the other hand, will be coming up with its own streaming service where all of its original content will be released.

Last week, Netflix confirmed its plans to spend around $7 billion to $8 billion in the production of original content next year with plans to release around eighty original films next year. Netflix which currently has $4.8 billion in long-term debt is expected to drive in $2 billion to $2.5 billion in negative free cash flow this year alone with $750 million being allocated for the fourth quarter according to a number of analysts.

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