Netflix bears have long questioned the company's
cash-burning strategy. In order to make original TV and movies, Netflix has to spend heavily up front, and it only recoups those costs years later from subscription revenues as the product streams on its service.
Free cash flow came in at negative $3.3 billion last year, which Netflix expects to be a trough, and it's had to take on a substantial amount of debt to fund that strategy. In fact, it announced another $1 billiion debt offering Wednesday morning. However, one of the silver linings from the pandemic is that Netflix has been able to save on cash costs with production on pause, and the company now expects free cash flow of negative $1 billion or better for 2020, though management sees a return to its general trajectory toward positive free cash flow next year. The company does not have a specific target for generating a free cash flow profit.