Just when you thought it could not get worse for Netflix, it did. The company announced it raised two rounds of $200 million to shore up its balance sheet.
Netflix is raising $200 million through the sale of zero coupon convertible notes.
Technology Crossover Ventures will be buying the notes, and have the right to nominate one person to the board of Netflix.
The notes are convertible into Netflix common stock at $85.80 per share.
Additionally, Netflix has sold $200 million worth of stock to T. Rowe Price.
Netflix’s shares were down as much as 6 percent to $69 on the news. That’s a far cry from the $300 it was trading in July of this year.
A Netflix PR said they were raising the money because two strategic investors offered the money and they saw it as an opportunity to strengthen their balance sheet. The PR person went on to say: “We don’t need the money, but it’s always nice to have more money than you need when a) your business is incredibly dynamic and b) global markets are incredibly volatile.”
BS! If you ask me. Netflix is headed for a cash crunch.
Netflix needs the money because it has something like $2.5 – $3 billion in liabilities that it owes the studios for its catalog. Without the catalog, viewers would drop faster than flies. As more viewers drop, the more its revenue drops and hence there will be less money for operations and movies.
With the likes of Comcast, Walmart and Apple rolling out their service. Its a only a matter of time, before curtain call. A company that once thought that it was better than Apple, wouldn’t sell to Apple or for $20 billion needs $200 million for its very survival. It is indeed a horror show for Netflix.Channels: netflix