Netflix raising $2 billion in debt for new content

This is happening for the second time this year that Netflix is going to offer $2 billion in debt (euros and dollars) so as to fund its investment in content including original programming, content acquisitions, investments and many more. This is done to fund more original content for Netflix as well as other expenses. The news came in on Monday, 21st October 2019. The news was followed by a dip in the company's stock prices. This will solidify Netflix's market share.

This decision to enhance its investment in the content production field follows Netflix’s high earnings beat the last week when it had reported revenues of $5.24 billion versus the expected $5.25 billion, and EPS of $1.47 versus the expected $1.07. Netflix missed the subscriber numbers in Q3, and despite that Netflix’s stock quickly surged on the news.

However, the streaming service is not out yet. It will be facing a significant competition pretty soon especially among families that have children when the next month, Disney+ will be launching. Apple is also planning to launch the Apple TV+, NBCU is going to bring to us Peacock, AT&T’s Time Warner is going to debut with HBO Max and Jeffrey Katzenberg is planning to launch a mobile-only service called Quibi with big-name talent attached to it.

Netflix had said in a statement that the interest rate, maturity date as well as the other important terms of this offering will be determined soon by negotiating with the initial purchasers.

Each one of these services will not really bring Netflix down as a top streamer. But together, they can steal away Netflix's user base only if the consumers find the other competitors better and would decide to switch to them. 

On the company’s Q3 earnings call, Mr. Reed Hastings, the CEO of Netflix has admitted the fact that Disney will be a great competitor of Netflix. He had even pointed out that all of the services such as Hulu, YouTube, and Amazon Prime and others have been competing more with the linear TV than against each other.

Netflix states that it will still need to better its content so that it can keep its customers and bring in new customers to subscribe. This can turn out to be expensive.