Another Unicorn IPO Crashes (a whopping 60%)



Posted by Ed 29 days ago
Short-sellers are the only ones smiling now.... 
Perhaps Do-It-Yourself braces is actually not that great of an idea afterall....
Apparently these contraptions can mess up your teeth and jaw resulting in far more serious dental problems. 
SmileDirectClub’s stock has dropped by 60% since it went public last month, making it one of the worst-performing IPOs of the year. Shares have plummeted as the company, which makes custom teeth aligners, battles a short-seller waging a boisterous campaign and a third state regulator looking to impose new restrictions on its operations. 


Ed 28 days ago
And then... there is this:
Cash-Flow Zombie Netflix Extracts Another $2 Billion from Befuddled Investors
“Don’t get me wrong: there is still lots of money out there chasing these companies,” I said in I said in my podcast on Sunday, naming Netflix as one of the perennially cash-flow negative companies – the “cash-burn machines” – that have to borrow huge amounts of money every year to make ends meet, and that still find eager investors to lend them this money. I said this, not knowing what Monday would bring.
And sure enough, Monday brought an announcement by Netflix that it would borrow another $2 billion via another bond sale – its second this year, after having already borrowed $2.2 billion in April.

These proposed senior unsecured notes, which will mature in 2030, will be sold in US dollars and euros to institutional investors, not the public. In other words, these bonds go into pension funds, insurance funds, bond funds, junk bond funds, and the like — and you may own a slice of them whether you want to or not.


Moody’s this morning rated the bonds Ba3, three notches into junk and left Netflix’s corporate credit rating at Ba3. S&P rates Netflix BB-, also three notches into junk (my cheat sheet on corporate credit ratings by Moody’s, S&P, and Fitch).


“Cash-flow breakeven” maybe, after 26 years in business.

In April 2018, Moody’s estimated that Netflix may reach “cash-flow breakeven” in 2023, and in today’s assessment it stuck to that estimate.

And here’s the thing: Netflix was founded in 1997. By 2023 the company will be 26 years old, and if all goes incredibly well, the company may finally reach cash-flow “breakeven” – not even cash-flow positive – 26 years after it was founded? I mean, give me a break.

Its balance sheet is a mess. After years of borrowing cash and then burning it, the company now has $12.1 billion in “content liabilities” and $12.4 billion in long-term debt, for a total of $25.5 billion that it owes.

That $2 billion in new debt to be issued will bring its long-term debt to $14.4 billion, and the total to $27.5 billion. 

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