Netflix To Raise $1.8 Billion: Here's How The Company Is Using Funding From First Debt Offering In 4 Years

Streaming giant Netflix Inc (NFLX) is raising $1.8 billion in a debt offering. The move is being done to help the company refinance debt and to continue competing in the highly competitive streaming sector.

What Happened: Netflix (NFLX) ended the second quarter with 277.65 million global paid subscribers, adding 8.05 million paid subs in the quarter.

The company continues to be a leader in the streaming space and a new debt offering could be done to continue that leadership.

Netflix (NFLX) is raising $1.8 billion with $1 billion in 4.9% senior notes due in 2034 and $800 million in 5.4% senior notes due in 2054.

This is Netflix’s first debt offering since April 2020 and the first since being upgraded to investment-grade status by Moody's and S&P Global in 2023, as reported by The Hollywood Reporter.

Netflix (NFLX) said it will use the cash raised from the offering to refinance debt that matures next year and for "general corporate purposes."

"Our management will have broad discretion in the application of the net proceeds, and the purposes for which they are used may change from those described above," the company said.

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Why It's Important: The new debt offering appears to be mainly to refinance existing debt, but will likely catch the eyes of investors and analysts and could lead to speculation.

Netflix (NFLX) has been aggressive in acquiring sports rights with WWE content and two National Football League games among the upcoming live sports content being available to subscribers in the future.

The company is also continuing to pursue its gaming aspirations and seeking growth with its ad-supported plan.

Armed with additional cash from the offering, the company could consider acquisitions in the streaming or gaming space to continue its growth.

NFLX Price Action: Netflix (NFLX) shares are up 1% to $626.30 on Wednesday, versus a 52-week trading range of $344.73 to $697.49. Netflix (NFLX) stock is up 28% year-to-date in 2024.

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