Netflix Credit will remain in ‘junk’ territory at Moody’s for at least a few more quarters

Moody’s Investors Service reiterated Netflix Inc.’s NFLX,
-3.92%
The Ba1 credit rating, which is the highest rating without investment grade, or “junk”, follows the streaming video company’s “weak” first-quarter results released earlier this week. Netflix stock fell 3.5% in afternoon trading, putting it on course for the lowest close since January 2018, after plunging 35.1% on Wednesday. The rating agency also confirmed the positive rating outlook, suggesting that the next rating change would be an upgrade to investment grade. Moody’s said that while it still expects subscriber growth in the second half and for the full year, it believes there is “greater uncertainty” after the results. of the first trimester. “[W]We also continue to believe that the medium to long-term credit outlook remains favorable for the company despite the cloud hanging over the company following the fall in Netflix’s overheated stock valuations and accompanying headlines,” Moody’s said. Therefore, we’ll likely watch a few more quarters to determine new trendlines and reset more specific expectations, as well as assess new business levers to increase revenue and free cash flow before we consider moving forward. raise the company’s credit ratings to investment grade. Moody’s calls Netflix’s credit “junk,” S&P Global Ratings rates it BBB, two notches above the investment grade threshold. The stock has plunged 63.8% since the start of the year, while the S&P 500 SPX,
-0.57%
lost 6.9%.