Have you ever wondered how Netflix is able to have your favorite movie on their website within a matter of months after first appearing in the movie theaters? Of course they have to pay a licensing fee but those fees cost a ton, which is why Netflix is facing a huge debt like MoviePass.
But unlike MoviePass, Netflix has been willing to raise the prices of their service, which currently costs $13.99 with all of the benefits. But the biggest problem Netflixfilx comes with the original content that is produced.
Shows like Orange is the New Black and Big Mouth cost money to produce and a ton of it at that. This has resulted in Netflix selling over $2 billion worth of bonds earlier this week, which has multiple investors and rating agencies saying that Netflix is selling below market value. This also includes a current debt of $8.3 billion.
The good news for Netflix is that they will eventally break even, but as long as they keep spending cash faster than they collect it, Netflix will be in debt. The biggest issue for Netflix is its stock value, which is currently at $299. This number was at a high of $400, but numerous people have felt that even the $299 value is way too high.
If Netflix were to drop down lower than $200 a share, we could see companies like Disney, Time Warner, and Comcast try to buy the multi-billion dollar corporation. A result like that should have you worried about your “Netflix and Chill” nights.
However, that is only speculation. For right now, just realize that Netflix would have to collapse before we see results like these.