The Netflix Stock Split Is Coming. Here's What You Need to Know.

Core Viewpoint - Netflix announced a 10-for-1 stock split, surprising investors ahead of its third-quarter earnings report, as the company aims to make shares more accessible to employees and retail investors [1][2][3]. Stock Split Details - The board of directors approved a 10-for-1 stock split, which will take effect on November 17, allowing shares to trade at a more accessible price range [3]. - Following the announcement, Netflix shares rose by 3.1%, although this was a muted response compared to other recent stock splits [3]. Market Context - Netflix's share price had previously exceeded $1,000, alleviating post-pandemic growth concerns, and aligning with trends seen in other major tech companies that have executed stock splits [2]. - The stock split is intended to enhance accessibility for employees and retail investors, which is generally viewed positively for both the stock and investors [4]. Performance Insights - Historical data suggests that stocks may outperform in the 12 months following a stock split, potentially due to investor perception or management confidence in business growth [5]. - Despite the lower individual share price post-split, the stock's valuation relative to financial metrics like earnings or dividends remains unchanged [5]. Company Growth and Valuation - Netflix continues to demonstrate strong mid-teens revenue growth and robust profit margins, with successful ventures into advertising and live events contributing to its growth trajectory [8]. - The company is currently valued reasonably, down 16% from its peak earlier this year, with earnings per share expected to grow by over 25% through next year, indicating it remains a smart investment opportunity [9].