Should You Buy Netflix Stock After Its 10-for-1 Split?
Netflix’s recent 10-for-1 stock split, executed on November 17, 2023, has ignited discussions among investors. With the stock trading around $106 post-split, many are questioning whether Netflix stock remains a strong long-term investment.
Understanding the Impact of Stock Splits
Stock splits often create excitement around a company’s stock. They aim to increase share liquidity and make shares accessible to more investors. In Netflix’s case, the split follows an impressive 800% price increase over the past decade.
Market Performance Post-Split
Research from Statista indicates that stocks experiencing a split historically yield an average total return of 25.4% in the year following the split. This performance notably exceeds that of the S&P 500, which tends to see a significantly lower return during the same period.
Current Market Position of Netflix
- Market Capitalization: $442 billion
- Current Price: Approximately $104.31
- Day’s Range: $103.81 – $106.53
- 52-Week Range: $82.11 – $134.12
- Revenue Growth: Sales increased by 17% year-over-year, amounting to $11.51 billion
- Content Spending: Set to reach $18 billion by 2025
Despite significant competition in the streaming industry, Netflix continues to capture market share, particularly in the U.S. and U.K. Recent conflicts, such as the Canelo vs. Crawford boxing match, have showcased the company’s ability to attract viewers to its new original programming.
Challenges and Opportunities
While Netflix faces competition from major players like Disney and Amazon, it is exploring ways to enhance its content library. The company is reportedly interested in acquiring Warner Bros. Discovery, which would significantly enhance its portfolio.
Investors looking at Netflix should consider its growth potential in international markets, particularly in regions like India, where current market penetration is just 13%. This market is poised for growth as wealth increases in these areas.
Is Netflix a Good Investment Post-Split?
With a high market cap of $442 billion, some growth investors might hesitate. However, Netflix has avenues for revenue generation, including potential price increases and advertising strategies that could result in $10 billion annually by the end of the decade.
Final Thoughts
In conclusion, despite its size, Netflix offers strong potential for long-term growth. The recent stock split enhances its stock’s accessibility, but investors should remain focused on underlying fundamentals when evaluating this streaming giant.
