Why Netflix Investors Have Nothing to Worry About
Netflix (NASDAQ: NFLX) delighted investors with better-than-expected subscriber growth in the second quarter. The streaming-video service continues to attract new subscribers both domestically and abroad even as it's raised its pricing. Netflix points to its original content as a key driver of that subscriber growth, and it's investing heavily to create new originals every month.
But all those originals come at a cost. Not only do they factor into Netflix's monstrous $6 billion annual content budget, but Netflix has to pay out of pocket for all that content, leading to significant cash burn. Netflix management expects negative cash flow between $2 billion and $2.5 billion for 2017, and it expects negative free cash flow for "many years" to come.
That may concern some, but Netflix investors have nothing to worry about.
Source: Fool.com
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