Buying Netflix 10-for-1 Stock Split? Expect Underperformance

Core Viewpoint - Netflix Inc (NASDAQ:NFLX) has announced a 10-for-1 stock split, which will make its shares more accessible to retail investors, despite the fundamental value of the company remaining unchanged [1][2]. Stock Split Performance Analysis - Historical data from 310 stock splits since 2010 indicates that stocks slightly underperformed in the very short term after a split, with an average two-week return of 0.48%, compared to 0.60% for the S&P 500 Index (SPX) [4][5]. - Over longer periods, the average returns for stocks post-split are marginally above SPX returns, but only half of the stocks outperformed the index, with increased volatility in returns [4][5]. High-Priced Stocks Performance - Stocks priced above $400 before the split showed an average decline of 1.2% in the first two weeks post-split, with only 38% beating the SPX [9][10]. - However, these high-priced stocks yielded an average return of 17.4% over the next year, outperforming the SPX's 9.8% return, despite only 50% of them being positive [10]. Large-Cap Stocks Performance - For stocks with a market cap above $50 billion, the average return over the first three months post-split was a slight loss of 0.3%, with only 40% beating the SPX [15][16]. - Over the next year, these stocks averaged close to 11% return, aligning with the broader market, but only 54% of the returns were positive compared to 81% for the SPX [16][17]. Combined Filters Analysis - An analysis of large-cap stocks (above $50 billion) priced above $400 before the split revealed an average loss of 2.82% over the next three months, with only 35% beating the SPX [20][22]. - Over the next six months, these stocks averaged a return of just 1.78%, with less than half being positive and only 37% outperforming the SPX [20][22].