An Open Letter To Reed Hastings: Do An Equity Offering Now

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About: Netflix, Inc. (NFLX), Includes: TSLA
by: Whitney Tilson
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Summary

I am a huge admirer of Reed Hastings, a bold visionary striving to make his company a market leader in an enormous emerging global market.

To do so, Netflix has been making big up-front investments, resulting in billions of dollars of negative free cash flow.

To fund this deficit, Netflix has issued billions in debt - carrying so much debt is risky and makes little sense in light of Netflix’s richly valued stock.

Therefore, the company should do a large equity offering immediately.

The same arguments hold true for Elon Musk and Tesla.

Netflix (NASDAQ:NFLX) CEO Reed Hastings is one of my favorite CEOs. His bold and visionary leadership of Netflix has led the stock to increase more than 40 times in the last 5½ years.