- Netflix announced plans to raise $US1.6 billion in debt.
- The funds will be for general purpose uses, including funding new content.
- Shares are ticking higher, up 0.32% ahead of the opening bell
On Monday, Netflix announced it will raise $US1.6 billion in debt to fund its ever-increasing content budget.
The move comes after Netflix announced a content budget of between $US7 billion and $US8 billion for 2018. The company said it hopes to increase the amount it is spending on original content that it won’t have to licence from partners.
Netflix has said that good, original content is its main driver of subscriber growth, so it makes sense that it would want to spend more money in the area. The company reported a total net addition of 5.3 million subscribers in the third quarter, easily outpacing the 4.5 million additions that Wall Street was expecting.
The company’s biggest subscriber additions were outside of the US, which Ben Swinburne, head of media research at Morgan Stanley, told Business Insider is one of the more impressive parts of Netflix’s business.
By offering original content in a country’s native language, Netflix has been able to penetrate even emerging markets like Brazil. On the company’s earnings call, company executives said that native language programming has the power to cross borders and become popular internationally as well.
Netflix said it hopes to add another 5.05 million subscribers in the third quarter.
Shares are up 52.24% this year.
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