Anti-Tilson ETF Goes Ballistic: Netflix Plunges After Company Announces Equity Raise - News and Current Events | futures trading

Go Back

> Futures Trading, News, Charts and Platforms > Traders Hideout > News and Current Events

Anti-Tilson ETF Goes Ballistic: Netflix Plunges After Company Announces Equity Raise
Started:November 21st, 2011 (05:40 PM) by Quick Summary Views / Replies:185 / 0
Last Reply:November 21st, 2011 (05:40 PM) Attachments:0

Welcome to

Welcome, Guest!

This forum was established to help traders (especially futures traders) by openly sharing indicators, strategies, methods, trading journals and discussing the psychology of trading.

We are fundamentally different than most other trading forums:
  • We work extremely hard to keep things positive on our forums.
  • We do not tolerate rude behavior, trolling, or vendor advertising in posts.
  • We firmly believe in openness and encourage sharing. The holy grail is within you, it is not something tangible you can download.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.

You'll need to register in order to view the content of the threads and start contributing to our community. It's free and simple, and we will never resell your private information.

-- Big Mike

Thread Tools Search this Thread

Anti-Tilson ETF Goes Ballistic: Netflix Plunges After Company Announces Equity Raise

Old November 21st, 2011, 05:40 PM   #1 (permalink)
Quick Summary
Anti-Tilson ETF Goes Ballistic: Netflix Plunges After Company Announces Equity Raise

When we discussed the slow motion trainwreck that is the implosion of Netflix back on October 11, our only outstanding question was "when is the inevitable follow on equity offering coming?" We have the answer, and it is now. Netflix just announced in an 8-K filing that it has raised $200 million in convertible notes. The conversion price is a laughable $85.80 or just 16% above the closing price, confirming this is nothing short of an equity raise in sheep's clothing, and indicates that the firm may have well entered a liquidity death spiral courtesy of a business model that still has to generate any substantial free cash flow. Naturally, the second investors realize this they will dump the stock in droves, which is horrendous news for Whitney Tilson, but amazing news for everyone long the Anti-Tilson ETF. In other news, it may just be time for Tilson to call it a career.

NFLX After Hours:

Please register on to view futures trading content such as post attachment(s), image(s), and screenshot(s).

From the 8-K

The completion of the private placement of the Notes is contingent on satisfaction or waiver of customary conditions, as well as a requirement that the Company shall have raised at least $200 million in aggregate gross proceeds from the sale of its common stock to non-affiliated third-parties. The Purchase Agreement provides that the private placement to TCV will be completed on

(i) November 28, 2011 or, (ii) if the conditions set forth in the Purchase Agreement have not been satisfied on or prior to November 28, 2011, the first business day following the satisfaction or waiver of such conditions or

(iii) such other date as is mutually agreed upon in writing by the parties. No assurances can be made that the TCV transaction will close when expected, with the terms described herein, or at all.

The Notes will be issued under an indenture between the Company and a trustee (the "Indenture"). The Notes do not bear interest. The Notes will mature on December 1, 2018, subject to earlier conversion or repurchase.

The initial conversion rate for the Notes is 11.6553 shares of the Company's common stock, par value $0.001 per share ("Common Stock"), per $1,000 principal amount of Notes. This is equivalent to an initial conversion price of approximately $85.80 per share of Common Stock. Holders may surrender their Notes for conversion at any time prior to the close of business on the business day immediately preceding the maturity date for the Notes.

The Notes are the Company's general, unsecured obligations and are effectively subordinated to all of the Company's existing and future secured debt, to the extent of the assets securing such debt, and are structurally subordinated to all liabilities of the Company's subsidiaries, including trade payables. The Indenture does not limit the amount of indebtedness that the Company or any of its subsidiaries may incur.

Upon the occurrence of a change of control, which will be defined in the Indenture, each holder of the Notes will have the right to require the Company to repurchase some or all of such holder's Notes at a purchase price in cash equal to 120% of the principal amount thereof.

At any time following the six month anniversary of the closing date under the Purchase Agreement, the Company may elect to cause the conversion of the Notes into shares of the Company's Common Stock when specified conditions are satisfied, including that the daily volume weighted average price of the Company's Common Stock is equal to or greater than 130% of the then-applicable conversion price for at least 50 trading days (including the trading day immediately prior to the conversion date) during a 65 trading day period prior to the conversion date.

Perhaps the most important section is the EOD definition as whoever is dumb enough to buy these will have to deal legalese with this very, very soon.

The following events are considered "Events of Default," which may result in the acceleration of the maturity of the Notes under the Indenture:

  • the Company's failure to pay when due the principal on any of the Notes at maturity, upon required repurchase, upon declaration or otherwise;
  • the Company's failure to pay interest on any of the Notes for 30 days after the date when due;
  • the Company's failure to give timely notice of a change of control (as defined in the indenture);
  • the Company's failure to comply with its obligation to convert the Notes into shares of Common Stock upon exercise of a holder's conversion right;
  • the Company's failure to perform or observe any other covenants or agreement under the Notes or the Indenture governing the Notes and the Company fails to cure or obtain a waiver of such default for a period of 60 days after receiving notice of such failure;
  • A default by the Company under any debt (as defined in the Indentures) that results in acceleration of such debt, or the failure to pay any such debt at maturity, in an aggregate principal amount in excess of $25 million, and such acceleration has not been rescinded or annulled within 30 days; and
  • Certain events of bankruptcy, insolvency or reorganization with respect to the Company or any significant subsidiary.
More on ZeroHedge...

Reply to share your thoughts on this current event.


Reply > Futures Trading, News, Charts and Platforms > Traders Hideout > News and Current Events > Anti-Tilson ETF Goes Ballistic: Netflix Plunges After Company Announces Equity Raise

Thread Tools Search this Thread
Search this Thread:

Advanced Search

Upcoming Webinars and Events (4:30PM ET unless noted)

NinjaTrader 8: Programming Profitable Trading Edges w/Scott Hodson

Elite only

Anthony Drager: Executing on Intermarket Correlations & Order Flow, Part 2

Elite only

Adam Grimes: Five critically important keys to professional trading

Elite only

Machine Learning Concepts w/FIO member NJAMC

Elite only

MarketDelta Cloud Platform: Announcing new mobile features

Dec 1

NinjaTrader 8: Features and Enhancements

Dec 6

Similar Threads
Thread Thread Starter Forum Replies Last Post
NFLX Netflix Big Mike Stocks and ETFs Trading 36 October 19th, 2014 03:36 PM
Another Tough Month For Tilson As CNBC's Favorite Buffett-Worshipper Is Down Over 24% Quick Summary News and Current Events 0 November 18th, 2011 12:50 AM
Deja Vu All Over Again: An Unsolicited Whitney Tilson Explains Why He Is Short Green Quick Summary News and Current Events 0 November 13th, 2011 11:10 PM
Bank of America stock plunges 20% kbit News and Current Events 1 August 8th, 2011 07:33 PM
Netflix, Apple, Others Shake Up The Entertainment Industry Quick Summary News and Current Events 0 April 29th, 2011 04:30 PM

All times are GMT -4. The time now is 03:47 AM.

Copyright © 2016 by All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts

Page generated 2016-10-26 in 0.06 seconds with 19 queries on phoenix via your IP