Should You Invest in Netflix After Its 10-for-1 Stock Split?
Netflix recently implemented a 10-for-1 stock split, reducing the share price from over $1,125 to approximately $112.50. This change aimed to make the stock more accessible to a broader range of investors.
Understanding the Stock Split
A stock split increases the number of shares while maintaining the overall market capitalization. Following this split, each existing share was converted into ten smaller shares. Although the share price has decreased, the total value of the investment remains unchanged.
Current Stock Performance
As of the latest trading session, Netflix’s stock exhibited a minor decline of 3.64%, leading to a current price of $111.22. The market capitalization stands at approximately $47 billion.
Key Financial Metrics
- Market Cap: $47 billion
- Current Price: $111.22
- Day’s Range: $110.73 – $114.28
- 52-week Range: $80.93 – $134.12
- Volume: 95,000 shares
- Average Volume: 36 million shares
- Gross Margin: 48.02%
- Dividend Yield: N/A
Profitability and Comparison
Netflix’s profitability has significantly improved since 2016 when the company recorded a net profit of $187 million. This year, projections indicate earnings approaching $10 billion, representing a substantial increase.
Despite this positive trend, the stock still carries a valuation of 48 times trailing earnings. While this might appear costly, it is not as prohibitive as it seemed a decade ago, or even last week.
Investor Considerations
Given the new pricing post-split, potential investors may find Netflix shares more appealing. Purchasing shares at $112.50 could seem like a bargain compared to the price seen nine years ago.
In conclusion, while the stock split doesn’t change the company’s overall value, it does make Netflix shares more accessible. Investors should consider the company’s strong earnings growth and market position before deciding if now is the right time to invest in Netflix.
