Netflix Announces 10-for-1 Stock Split After Share Price Surges
Key Takeaways:
- Netflix announced a 10-for-1 stock split, effective November 17, 2025, aiming to make its shares more accessible to individual investors.
- The split will reduce the per-share price from approximately $1,100 to around $110, without altering the company’s overall market capitalization.
- Analysts expect a potential short-term boost in the stock price due to increased retail investor participation, but long-term performance will depend on fundamental factors.
- The fair value estimate by Morningstar will be adjusted to $77 per share post-split, reflecting the purely mechanical division.
- Netflix joins other major companies like ServiceNow, Broadcom, Nvidia, Walmart, and Chipotle in implementing stock splits recently.
- The split does not alter Netflix’s fundamentals; it is primarily a move to improve stock liquidity and accessibility.
Netflix Announces Stock Split
Streaming giant Netflix (NFLX) recently announced a 10-for-1 stock split, a decision made after a robust rally in 2025 propelled the company’s shares above the $1,000 mark for the first time in February. Netflix’s stock is among the highest-priced in the Morningstar US Market Index, ranking twelfth overall. The stock split means that for every share held on the record date of November 10, shareholders will receive nine additional shares after the close of trading on November 14. The shares will commence trading on a split-adjusted basis starting November 17.
Rationale Behind the Split
According to Morningstar senior analyst Matthew Dolgin, Netflix’s strong brand appeal makes its stock desirable among individual investors. However, the high price of the stock may have deterred some potential investors. Dolgin suggests that the high dollar price of Netflix stock has led to a greater institutional skew than it would be otherwise. The stock split is intended to bring the price down from around $1,100 per share to near $110. This move is expected to make the stock more attractive to retail investors, thereby broadening the investor base.
Historical Context of Netflix Stock Splits
Netflix has a history of implementing stock splits. Prior to this announcement, the company executed two stock splits: a seven-for-one split in 2015 and a two-for-one split in 2004. These previous splits, like the current one, aimed to make the stock more accessible to a wider range of investors.
Understanding Stock Splits
A stock split is a corporate action in which a company increases the number of its outstanding shares by dividing each existing share into multiple new shares. Although the number of outstanding shares increases, the overall value of the company remains unchanged. Companies often undertake stock splits when their stock price has risen to a level that may seem prohibitively expensive for individual investors. The rationale behind a stock split is that having a larger number of cheaper shares can attract more buyers, which can improve liquidity. Additionally, a lower share price can make the stock appear more appealing to potential investors, even though the company’s underlying value remains the same.
Implications for Investors
Dolgin emphasizes that the stock split will not alter Netflix’s fundamental business operations or intrinsic value. The company’s fair value estimate will be adjusted from $770 per share to $77 per share, which is a purely mechanical division in line with the 10-for-1 split. It is important to note that Dolgin had recently increased the stock’s fair value estimate from $750 following the firm’s third-quarter earnings report.
Dolgin anticipates a potential short-term boost to the stock price following the split. He believes that the split will apply upward pressure to the stock because it will become more accessible to retail buyers, especially through call options, which also generate more demand. However, he cautions that the long-term performance of the stock will depend on fundamental factors. While the split may create temporary excitement, he maintains that news and results will ultimately dictate the stock’s trajectory. Dolgin also believes the stock is fundamentally overvalued and should trade lower eventually. Netflix currently has a Morningstar Rating of 2 stars, indicating that it is trading at a 45% premium to its fair value estimate.
Recent Trends in Stock Splits
After a relatively quiet first three quarters of 2025 in terms of stock splits, Netflix’s announcement marks the second major company to make such a move in the fourth quarter. ServiceNow (NOW) has also announced a five-for-one split, which is subject to approval by the company’s board in December. In 2024, several other prominent companies implemented stock splits. Broadcom (AVGO) and Nvidia (NVDA) both conducted 10-for-1 splits, Walmart (WMT) executed a three-for-one split, and Chipotle (CMG) enacted a 50-for-1 split, which was one of the largest in the history of the New York Stock Exchange.
