Netflix raised prices 60% the other day, lost 850,000 subscribers and already the streaming video service looks to be struggling—at least with its cash position.
The company is reportedly offering $200 million in bonds for sale on the capital markets in an effort to raise cash to fund its operations. The offer seems to have found favor with Technology Crossover Ventures, a venture-capital firm that is no stranger to late-stage investments. Just recently Technology Crossover made a late stage acquisition of a stake in popular Daily Deals website, Groupon.
The bond sale has with it the option for stock conversion at a later date and this has left many analysts and investors rather uneasy. The issue for most is that short term cash infusion can usually be handled by a bank loans, and funds of that nature. Given up an equity stake—albeit a deferred one, shows among other things that Netflix doesn’t have the confidence of lenders. This is worrying and the signs of cracks are already starting to show.
Share in Netflix were down 8% on news of the bind sale announcement and experts are predicting future falls unless Netflix can show that the shake-up among subscribers won’t impact adversely, the EPS in the medium to long term.
Is Netflix falling without a parachute? Share your thoughts in the comments below.
Source: http://www.sitetrail.com/2011/11/26/netflix-selling-200-million-in-bonds-for-quick-cash-infusion/
The company is reportedly offering $200 million in bonds for sale on the capital markets in an effort to raise cash to fund its operations. The offer seems to have found favor with Technology Crossover Ventures, a venture-capital firm that is no stranger to late-stage investments. Just recently Technology Crossover made a late stage acquisition of a stake in popular Daily Deals website, Groupon.The bond sale has with it the option for stock conversion at a later date and this has left many analysts and investors rather uneasy. The issue for most is that short term cash infusion can usually be handled by a bank loans, and funds of that nature. Given up an equity stake—albeit a deferred one, shows among other things that Netflix doesn’t have the confidence of lenders. This is worrying and the signs of cracks are already starting to show.
Share in Netflix were down 8% on news of the bind sale announcement and experts are predicting future falls unless Netflix can show that the shake-up among subscribers won’t impact adversely, the EPS in the medium to long term.
Is Netflix falling without a parachute? Share your thoughts in the comments below.
Source: http://www.sitetrail.com/2011/11/26/netflix-selling-200-million-in-bonds-for-quick-cash-infusion/