Netflix Raising $400 Million But Is Expected To Lose Money Next Year

Posted Nov 22, 2011

Netflix, Inc. (NASDAQ:NFLX) was trading at $300 per share five months ago and it is now trading at less than $75. The company is now planning on raising $400 million to fund their new content investments. Netflix will be raising $400 million by selling $200 million in zero coupon convertible notes to Technology Crossover Ventures and $200 million worth of stock to T. Rowe Price. But the problem is that the Netflix is going to lose money next year as well. Netflix had this information in the prospectus for the stock portion of its stock and convertible bond offerings.

We expect that consolidated quarterly revenue will be relatively flat until we can achieve positive net subscriber additions. As a result of the relatively flat consolidated revenues and previously announced increased investment in our International segment, we expect to incur consolidated net losses for the year ending December 31, 2012.

Netflix previously expected to only be losing money for the first few quarters of 2012. On the plus side, Netflix said that subscriber cancellations for their hybrid streaming and DVD businesses has slowed down. Gross additions for their streaming-only services has become strong.