Is a Stock Split on the Way for Netflix in 2025?

Core Viewpoint - High-quality companies like Netflix create significant long-term value, leading to soaring stock prices that may hinder retail investors from buying in [1] Company Performance - Netflix's share price is nearing $1,000 following strong financial results for 2024, with 18.9 million new subscribers added in Q4 2024, surpassing Wall Street's forecast of 8.2 million [3][6] - The total subscriber base reached a record high of 301.6 million, reinforcing Netflix's position as the leading streaming platform, far ahead of Disney+ with 122 million subscribers [3] - Netflix's total revenue for 2024 was a record $39 billion, reflecting a 15.7% increase from the previous year, accelerating from 6.6% growth in 2023 [6] Advertising Revenue - The introduction of an advertising subscription tier in 2022 has significantly contributed to Netflix's growth, with the ad tier accounting for 55% of new signups in available countries [4][5] - Advertising revenue doubled in 2024 compared to the prior year, with expectations to double again in 2025 [6] Earnings and Valuation - Netflix's earnings per share (EPS) increased by 64.8% to an all-time high of $19.83, showcasing the company's scale advantages [7] - The stock trades at a price-to-earnings (P/E) ratio of 49.6, below its five-year average of 51.6, with forecasts suggesting EPS could grow to $24.69 in 2025, leading to a forward P/E of 39.9 [12][13] Future Growth Potential - Netflix plans to invest a record $18 billion in content for 2025 to maintain its competitive edge, with only 6% penetration of its $650 billion global addressable market [11] - Live programming, including exclusive NFL games and a contract with TKO Sports for WWE content, is expected to enhance user engagement and advertising revenue [8][10] Stock Split Consideration - Given the high stock price and potential for further increases, a stock split may be likely in 2025, potentially a 10-for-1 split to make shares more accessible to retail investors [14][15][16]