The November 23, 2011, edition of the Wall Street Journal Online contains an article by John Jannarone

Question:

The November 23, 2011, edition of the Wall Street Journal Online contains an article by John Jannarone entitled “Backlash from Netflix Buybacks.”

Instructions

Read the article and then answer the following questions.

a. What was the stock price for the shares of common stock issued by Netflix in the article? What was the price of the stock a few months previously?

b. Why did Netflix issue new shares at a time when its stock price was so depressed relative to previous valuations for its stock?

c. What previous actions had Netflix taken to reduce its cash balance?

d. What does the article say is the lesson that growth companies should learn from the Netfl ix example?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...

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