Netflix shares have hit their lowest point in over a year, just a day after the company announced that it was raising $400 million in cash and will likely incur a loss in 2012.
The company said yesterday that it planned to raise cash by selling $200 million in common stock to T. Rowe Price at $70 a share, and another $200 million in bonds to its investor Technology Crossover Ventures. A Netflix spokesman told the WSJ that the company isn’t in dire need of more cash, but analysts consider the $400 million necessary as the company makes expensive content deals and prepares to launch in the U.K. and Ireland.
In a regulatory filing detailing the stock and bond sale, Netflix also said that it would be unprofitable for 2012, with revenues remaining flat until it can figure out a way to grow its subscriber base. The company lost 800,000 subscribers in the third quarter alone, many of whom abandoned the service after it announced a controversial price hike over the summer and later attempted to spin off its DVD rental program.
As a result of yesterday’s bad news, Netflix shares had fallen by 6.8 percent to $69.42 in early trading this morning, eventually reaching $69, their lowest point since February 2010. Company shares, which peaked at nearly $300 in July, have lost nearly two-thirds of their value in the past 12 months.