May 23, 2002 2:55 PM PDT
DVD site climbs on Wall Street debut
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Netflix sets plans for Wall St. premiereMarch 7, 2002
The company set an initial price of $15, at the top of its previously announced $13 to $15 range. It closed at $16.75 Thursday after rising as high as $17.40, or 16 percent.
Netflix said it would use the $82.5 million raised in the initial public offering to pay off $13.7 million in debt and for general purposes. The offering was underwritten by Merrill Lynch, Thomas Weisel Partners and U.S. Bancorp Piper Jaffray.
The company charges consumers a $19.95 per month for a subscription that allows them to choose movies online and have them shipped out via first-class mail. Subscribers return the DVDs using enclosed mailers. There are no late fees. Customers can rent as many movies as they want during a month but can only have three movies out at a given time.
Netflix says it has more than 600,000 customers, according to documents filed with the Securities and Exchange Commission. It lost $4.5 million in the first three months of this year, a sharp decrease from the $20.6 million it lost in the year-ago quarter. Revenue almost doubled year over year, rising from $17.1 million in the first quarter of 2001 to $30.1 million in the first quarter of 2002.
The company had $15.6 million cash on hand as of March 31.
Investors are probably looking favorably at the company's improving financial picture, said David Menlow, president of research service IPO Financial Network.
"Revenue is increasing at a robust pace, and losses are shrinking dramatically. Here's a company that represents the possibility of hitting critical mass," he said.
But that doesn't mean that we're poised for another dot-com deluge in the stock market, he said.
"I'm hopeful that it is a singular situation, not the beginning of a new trend on filings," he said. "We do expect, as the economy stabilizes, more deals to make it into the marketplace. But hopefully they will not be dot-com stocks."