Netflix's Success Only Makes It Burn More Cash

Netflix (NASDAQ: NFLX) isn't shy about discussing how much cash it burns. It's been free cash flow negative for a few years now, and management wrote, "[W]e expect to be FCF negative for many years" in its second-quarter letter to shareholders. In a recent interview at the Goldman Sachs Communicopia Conference, CFO David Wells reiterated that statement. He added that the more successful Netflix is, the longer it plans to burn cash.

Netflix's ongoing cash burn means it will continue to pile up debt. And it's paying a premium on that debt, since it's already carrying a relatively high debt-to-EBITDA ratio. Considering Netflix doesn't plan to increase EBITDA anytime in the near future, it's going to continue racking up interest expenses to fund its growth.

Image source: Netflix.

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Source: Fool.com