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Old 06-13-2018, 09:38 PM   #1
chikoo
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How Netflix sent the biggest media companies into a frenzy

Netflix has an enterprise value of $165 billion and EBITDA of $1.1 billion, giving it a multiple of about 150.

"To be worth $150 billion, someday you've got to make at least $10 billion in EBITDA," Steve Burke, CEO of CNBC parent company NBCUniversal, said in an interview. "There's at least a chance Netflix never makes that."

Netflix spends more money than it takes in each year, funding the gaps with debt. Last year, it posted free cash flow of almost negative $2 billion and has forecast that it could be negative $4 billion in 2018.

"What happens when they need to keep increasing their spending and suddenly they have $10 billion of debt? People are going to start asking, 'can this company pay us back?' If that happens, their lending rate will spike. If Netflix needs to raise capital, they'll issue stock. And that's when investors will get spooked," Pachter said.

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