A Multi-Billion Note Offering Nod From Netflix


With its domestic subscriber growth engine sputtering and most of its rapid acceleration occurring overseas, the biggest threat to broadcast and cable television has just revealed that it intends to offer — subject to market and other considerations — roughly $2 billion worth of senior notes.

It’s a huge bond offering from Netflix, and it plans to use the money raised from the multi-currency offering to pay for content, along with production and development costs.

In an early morning announcement from Netflix’s Los Gatos, Calif. headquarters, the company said it will offer both U.S. dollar denominated and Euro denominated senior unsecured notes in two series. It will do so through an offering to persons “reasonably believed to be qualified institutional buyers.”

The interest rate, redemption provisions, maturity date and other terms of each series of the notes will be determined by negotiations between Netflix and the initial purchasers.

As a basis of comparison, MarketAxess took a look at Netflix’s most active bonds — 5.875% notes that mature in November 2028. On Friday, they traded a yield spread of 271 basis points over comparable Treasurys, MarketWatch reports.

Long-term investors have enjoyed rapid and strong growth for Netflix stock, which was just below $50 a share five years ago. For short-term investors, it’s a different story, with NFLX demonstrating volatility across the last 12 months. In late December, shares dipped as low as $246.39. Then, they jumped to $385.03 at the end of April 2019.

Mid-September saw another dip, with shares falling into the $270 range. At 9:45am Eastern on Monday (10/21), NFLX was trading at $275.54.

It holds a 1-year target estimate of $360.05, with mid-term and long-term forecasts from analysts in the negative realm.

As RBR+TVBR reported Oct. 16, Netflix released third-quarter financial results that beat Wall Street expectations. But, a U.S. slowdown is clearly seen.

Domestic streaming paid net membership additions came in at 517,000. Analysts expected 800,000. One year ago, paid net membership additions grew by 998,000.