Why Netflix, Inc. (NFLX) Can’t Seem to Miss

The bad news for investors is that, because payments are front-loaded, Netflix, Inc. (NASDAQ:NFLX)’s original series often need to be funded with debt. CEO Reed Hastings has explained: “As we expand Originals, they will consume cash. Since we are otherwise using domestic profits to fund international markets, we will raise capital as needed to fund the growth of Originals.”

Expect Netflix’s debt levels to continue to rise. But, as long as the new shows keep meeting or exceeding Netflix’s projections, that spending should pay dividends in the form of higher net subscriber growth.

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The article Why Netflix Can’t Seem to Miss originally appeared on Fool.com.

Fool contributor Demitrios Kalogeropoulos owns shares of Netflix. The Motley Fool recommends Amazon.com and Netflix. The Motley Fool owns shares of Amazon.com and Netflix.

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