The Netflix Stock Split Is Here. Are Shares Still a Buy?

Core Viewpoint - Netflix has announced a 10-for-1 stock split, reflecting its significant growth and investor confidence since its last split in 2015, with shares now trading well above $1,000 [1][2] Financial Performance - Netflix's third-quarter revenue increased by 17.2% year over year, up from 15.9% in the second quarter, with management guiding for another 17% increase in the fourth quarter [3] - The company's operating margin is projected to expand from 27% in 2024 to 29% in 2025, indicating strong core business performance [5] Advertising Business - The advertising segment, although still small, is growing rapidly and is expected to more than double its revenue by 2025, providing an additional growth avenue beyond subscriber increases and price hikes [4] - The fast-growing advertising business is anticipated to significantly bolster profits over time [4][8] Stock Valuation - Netflix's current price-to-earnings (P/E) ratio exceeds 47, but its forward P/E ratio is more reasonable at 35, reflecting the company's growth potential and market leadership [7][8] - The stock split does not alter the company's intrinsic value; it merely changes the number of shares held by investors [6] Market Context - The competitive landscape remains intense, with significant competition from well-funded tech companies, necessitating cautious investment strategies [9]