Netflix, Inc. (NASDAQ: NFLX) is showing that it is nowhere at all close to representing a “value stock” today as many investors have been hoping. The company has filed a shelf registration statement that will allow it to raise capital via Morgan Stanley and J.P.Morgan. Right before its shelf registration statement, a current report (8-K), was filed showing that Netflix entered into a Note Purchase Agreement to sell to one or more investment funds affiliated with Technology Crossover Ventures $200 million in Zero Coupon Senior Convertible Notes due 2018.
The initial conversion rate is 11.6553 shares of Netflix common stock per $1,000 principal amount of the notes. This comes to an initial conversion price of approximately $85.80 per share.
Netflix closed down 4.6% at $74.47 today and the stock is trading down 5.6% at 69.80 in the after-hours session. Keep in mind that the prior 52-week range is $73.26 to $304.79, so this will mark a new 52-week low if the shares remain where they are.
If this company is needing to raise $200 million at a time after having had a $15 billion market value jus a few months ago, who cares if it is just to finance content deals. In the world of content, Netflix showed that the tail cannot wag the dog for very long.
JON C. OGG