Netflix’s hunger for external financing is legendary. The streaming giant has become one of the most valuable US tech companies in equity markets by leaning heavily on debt to fund its day-to-day operations. A massive 37m rise in subscribers last year means that it now believes it can rise from the sofa and stand on its own two feet.

For millions of people, global lockdown was alleviated by Netflix shows such as Tiger King, The Crown and Regency romp Bridgerton. It remains far larger than latecomer rivals such as Disney, Apple TV+ and Peacock.

Netflix must also thank a dip in spending for turning free cash flow from minus $3.3bn in 2019 to positive $1.9bn in 2020. As the pandemic shut down film and TV production, the company’s content spend fell from nearly $14bn in 2019 to slightly less than $12bn in 2020.

This number will tick up in 2021. Yet Netflix, which has $16bn of long-term debt and more than $19bn in “obligations” for content it wants to stream, is confident it has reached what chief financial office Spencer Neumann calls “a turning point in our story”. It is already promising to put future surplus cash into a stock buyback programme. Shares responded with a 12 per cent rise in after-hours trading. But this strategy will only work if Netflix keeps raising its subscription prices.

Sales of $6.6bn in the last quarter jumped 21.5 per cent on the same period a year ago. This was driven by a similar rise in subscriber numbers. Netflix has had to cast its net wide to find new viewers. About four-fifths came from outside the US and Canada, often in markets with lower subscription prices. In Turkey, for example, the standard plan is TL17.99 ($2.42) per month. The boost to revenues is therefore a combination of more subscribers and higher prices in markets such as the US, where the standard plan recently rose $1 per month to $13.99.

The prospect of Netflix weaning itself off debt is appealing. To achieve it, the company will have to keep testing the amounts that American viewers are willing to pay.

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