Netflix takes on more debt to fuel subscriber growth

Here Are The Key Numbers People Want To See From Netflix This Quarter

Netflix adds 5.3 million subscribers during Q3, beating analyst estimates

So, too, have the company's subscribers in both the US and overseas.

Before the Netflix 3Q 17 earnings report this afternoon, the company's stock closed at a record high, so it seems the buy-side had just as much conviction as the sell-side. Netflix continued added 5.3 million subscribers in the quarter, an increase compared with the 3.6 million the company added during the same quarter past year.

Netflix's global growth strategy carries risks. The Internet television network reported $0.15 earnings per share (EPS) for the quarter, missing the Zacks' consensus estimate of $0.16 by ($0.01).

Netflix CEO Reed Hastings and CFO David Wells defended a recent price hike for subscribers on the streaming service, pointing to an increase in content and value that comes at an additional cost.

Netflix's long-term debt and other obligations totalled $21.9 billion as of September 30, up from $16.8 billion at the same time past year.

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On Thursday, October 5th, Jonathan Friedland sold 1,217 shares of Netflix stock. Revenue for the third quarter was $2.98 billion, up from $2.29 billion a year ago and slightly above FactSet's consensus of $2.97. Heritage Investors Management Corp raised its stake in Netflix by 0.6% during the second quarter. Customers will be willing to pay more for a subscription because Netflix is spending more, the company has said.

And management appears to be trying to ease the financial drain with price increases of $1 and $2 a month for most of its 53 million subscribers in the US before the end of the year. The net result is a significant increase in NPV, and hence, target price, the analyst said. Netflix recently traded at 101 times expected earnings for the next 12 months, versus Inc at 144 times earnings and Time Warner Inc at 16 times earnings, according to Thomson Reuters data. Netflix presently has an average rating of "Buy" and a consensus price target of $191.24.

Having a hard time keeping up with everything Netflix is putting out?

Netflix has long argued its borrowing makes sense to gain a huge advantage over rivals as people increasingly watch programming on internet-connected devices. Finally, Citigroup Inc. upped their price objective on shares of Netflix from $180.00 to $205.00 and gave the stock a "neutral" rating in a report on Friday.

But that would be more hard to do if Netflix's stock price plummets amid concerns about its debt.

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