Netflix will no longer incur debt to fund its spending on television shows and movies, and could start giving back money to shareholders through buybacks, which is a milestone in the company’s evolution, as it has said it has 200 million subscribers passed.
Since 2011 when Netflix released the original programming with House of Cards, the streaming pioneer funded the content through high-yield bonds because he wanted to spend Hollywood studios and compile an enticing catalog.
Netflix’s latest quarterly figures on Tuesday highlighted how successful the strategy was: it had nearly 204 million subscribers at the end of 2020, and added 37 million new paying customers during the year.
About 8.5 million of them were added in the quarter to end-December, which obscured the analysis forecasts of 6 million.
“We believe we no longer have a need to raise external funding for our day-to-day operations,” Netflix said in a letter to investors, adding that it would investigate stock repurchases.
The stock rose about 10 percent in after-hours trading.
The California company has delighted investors over the past few years despite burning billions of cash. Netflix has promised that it will eventually no longer have to continue to raise junk debt to increase spending on content as it gathers more customers and increases subscriber prices.
The thesis played out largely, aided by a global pandemic that entices people to stick to Netflix’s streaming platform and comfortably advance it in the subscriber race. Its fiercest competitor, Disney Plus, has 87 million subscribers worldwide.
Most new registrations in the fourth quarter come from outside the US. In October, Netflix raised prices in the U.S., the largest market, by $ 1 to $ 14 a month for its most popular plan.
Revenue for the quarter rose 22 percent from the same period last year to $ 6.6 billion, according to analysts’ forecasts. Net income fell to $ 542 million from $ 587 million a year ago.