Netflix on Wednesday raised $82.5 million in an initial public offering, as investors bet the online DVD-rental company benefits from the surge of interest in DVDs as consumers upgrade home entertainment systems.
The Los Gatos, Calif.-based company sold 5.5 million shares at $15 each, at the top of the expected range of $13 to $15, according to Merrill Lynch, the investment bank that managed the sale.
Netflix has benefited from the fast growth of spending on home entertainment. Domestic consumer spending for in-home film entertainment was $29 billion in 2001 and is expected to grow to $41 billion in 2006, according to the company's prospectus, citing Adams Media Research.
The company's formula of charging a fixed $19.95 monthly rate to its 600,000 subscribers for unlimited rentals has yet to turn a profit, though losses are narrowing.
The company recorded a loss of $4.5 million on revenue of $30.1 million in the first three months of the year compared with a $20.6 million loss on $17.1 million of revenue during the same period in 2001. Netflix is expected to begin trading Thursday on the Nasdaq Stock Market under ticker symbol NFLX.
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