Core Viewpoint - A stock split is not a direct reason to buy shares, but it indicates management's confidence in the company's future growth potential [1][16] Company Overview - Netflix has approved a 10-for-1 stock split, reflecting strong performance and management's belief in continued growth [3][7] - The company has evolved from DVD rentals to the largest subscription video-on-demand service, streaming to over 300 million homes [5] Financial Performance - Netflix's revenue in the U.S. and Canada grew by 17% year-over-year, indicating strong subscriber retention despite price increases [9] - The advertising business is expected to double sales this year, contributing to the company's financial growth [8] Historical Context - Since 1980, stocks that have split have averaged a 25% increase in the following 12 months, compared to a 12% return for the S&P 500 [2] - Netflix has previously executed stock splits in 2004 (2-for-1) and 2015 (7-for-1) as its share price increased [7] Management Strategy - Netflix's strategy involves adding valuable content and adjusting subscription prices, which has led to improved financials and investor rewards [6][12] - The company maintains financial discipline, allowing it to manage expenses effectively and improve earnings power [14][15] Future Outlook - Continued growth in free cash flow is expected to support debt reduction and share buybacks, enhancing net earnings per share [15] - The stock is currently trading at about 34 times analysts' expected earnings for 2026, which is considered a fair price given the company's growth potential [15]