On Monday, Netflix announced that it will issue new debt of $2 billion.
As the online video-streaming giant continues to up the ante on content (up to $8 billion could be spent on content this year) amidst prolonged cash outflows, the company seems to be relying on even more debt to for its operations. Through the nine months ended Sept. 30, its free cash flow was a negative $1.7 billion. Netflix now has more than $10 billion in long-term debt obligation - compared to $8.3 billion at the end of the third quarter and $6.5 billion at the end of 2017. This year’s interest costs (excluding those on the latest debt issue) has climbed to $291 million from $238 million of full year 2018.
However, Netflix chief financial officer David Wells tried to sprinkle some hope for investors during the third-quarter earnings call with analysts where he said, “Netflix is approaching a point where the growth in operating profit is going to grow faster than our growth in content cash spend, and that’s really going to drive the free cash flow towards improvement – it will eventually break even,” and added that he projects a “material improvement” in cash flow by 2020.