Should You Buy Netflix After Its 10-for-1 Stock Split?

Core Viewpoint - Netflix is set to split its stock on a 10-for-1 basis, which will lower its trading price but will not affect the company's fundamentals or total market capitalization [2][5]. Group 1: Stock Split Mechanics - The stock split will occur on November 17, with shareholders receiving nine additional shares for each share owned as of November 10 [2]. - After the split, the stock will trade at one-tenth of its previous price, meaning a share worth $1,100 will become ten shares worth $110 each [3]. - The split does not change the total value of the investment; it merely increases the number of shares while reducing the price per share [3][4]. Group 2: Investor Perception and Market Impact - Stock splits can create a perception of affordability among novice investors, even though the underlying value remains unchanged [5]. - The announcement of a stock split serves as a reminder of the company's strong performance, justifying the split [5]. - Despite the split, Netflix will continue to trade at a high valuation, with a market cap around $500 billion and a forward price-to-earnings ratio of approximately 37, significantly higher than the S&P 500 average of 23 [8][9]. Group 3: Company Performance and Future Outlook - Netflix has experienced substantial growth, with its stock price increasing by around 270% since the beginning of 2023, closing at just under $1,093 [2]. - The company expects sales to rise by another 16% this year, exceeding $45 billion, indicating strong future growth potential [9]. - While Netflix remains a stellar company, its high valuation may limit short-term returns, but it could still be a good long-term investment [9].