$2B is new green

Netflix shares fall as debt nears $14B

CEO Reed Hastings is raiding the piggy bank again by announcing Netflix will return to the debt markets on Monday.

The video streamer said it plans to add $2 billion of senior notes to its current debt load of $11.8 billion.

It’s the company’s third trip to the debt markets in the past year. The company tapped into the debt markets in April for $1.6 billion, after raising $1.9 billion in November 2017.

Netflix is spending big on new content to help attract viewers to its streaming platform — a strategy that generated 7 million new subscribers in its most recent quarter.

The news exceeded Netflix’s own forecast of 5 million additions and, with better-than-expected earnings, sent the stock up 13.5 percent in extended trading after the results were announced on Oct. 16.

But after the stock touched a high of $380 on Oct. 17, investors began focusing on Netflix’s forecast of $3 billion in negative cash flow this year and ham- mered the shares.

Moody’s Investors Service assigned the new notes a rating of Ba3 — the third rung on its junk bond scale — but said Netflix’s leverage ratios should start improving in 2020.

Netflix shares fell almost 1 percent, to end Monday’s trading session at $329.54, after being down 3 percent on the debt offering, while its bond prices held steady.

While many believe Netflix still has growth potential, its ratcheting up debt by 71 percent in the past year has some analysts anxious.

“Given the cash flow burn or the lack of near-term EBITDA, we haven’t found the methodology to give us comfort on honestly recommending the stock,” analyst Michael Nathanson wrote in an update.

Separately on Monday, Netflix denied accusations of creating misleading promotions that pander to the race of potential viewers.

Stacia L. Brown, creator of the podcast Hope Chest, raised the issue in a tweet about minority actors being featured in a Netflix promotion for a movie with white leads.