Will NFLX Stock Split in 2017?
Stock splits have become something of a rarity in the stock market these days, especially in the tech sector. For a number of reasons, large-cap companies have been reluctant to split their stocks, even though there are some that many believe would be well-served by a healthy stock split. But one of the few tech giants that hasn’t shied away from a stock split is Netflix, Inc. (NASDAQ:NFLX). This has led many to question whether there will be a NFLX stock split 2017. More specifically, many are asking, “When will a Neftlix stock split date 2017 be released?”
The idea being that Netflix stock has split in the recent past, and therefore there is a chance that the company may look more favorably upon a NFLX stock split 2017 than other, more split-averse companies.
Why Netflix Could Split Its Stock
Other than the company’s historical affinity—or at least, not total avoidance—of stock splitting, leaving the door open for the company to once more reduce the price of NFLX shares, what else could motivate the stock to split?
First of all, there’s the idea that a NFLX stock split in 2017 would help encourage more investments, as cash-strapped investors would have a reduced barrier to entry. The company is already quite attractive, so the ability to own more shares following a Netflix stock split date 2017 could be an enticing motivator to see the streaming giant act and reduce its share price.
These are generally not earth-shaking gains, however, as most stock splits don’t push the needle too much one way or the other in the immediate aftermath.
Consider that Netflix stock is also around a comfortable $157.00 per stock—not exactly a prohibitive price. Consider that Amazon.com, Inc. (NASDAQ:AMZN), a company usually the target of calls for a stock split, has nearly a $1,000-per-share value, and you can see that Netflix is, by comparison, quite affordable.
That still doesn’t exclude the company from wanting to see a Netflix stock split date in 2017, but it wouldn’t be the most compelling reason for the company to reduce the price and increase the amount of shares.
One of the only other companies to have split its stock in recent years, Apple Inc. (NASDAQ:AAPL) did so in order to enter the Dow Jones Industrial Average (DJIA) index. The index only tracks 30 companies at a time, having to boot out an existing member in order to make room for a newcomer.
Another unique feature of the DJIA is that it tracks share prices, versus the NASDAQ and other indices that track market cap. As such, a company with a large share price would have an outsized impact on the index. Apple reduced its stock by a seven-for-one ratio in June 2014 in anticipation of its acceptance into the DJIA fold.
Chart courtesy of StockCharts.com
Netflix could very well qualify for the index. After all, it is an industry leader in streaming that has seen a revolution in the way we consume media, pushing more and more people to cut cables and become exclusive Internet programming surfers.
But another caveat here is that Netflix hardly needs to lower its price in order to fit the index criteria. After all, the highest ticker within the DJIA only lists at a hair above $200.00 per share. Netflix is well within the acceptable range to join the DJIA, should the index come calling.
So I would say that a NFLX stock split in 2017 is unlikely to happen, at least this year, unless we see stronger gains than anticipated and Netflix stock rises to unprecedented levels.
Essentially, a Netflix split date in 2017 is unlikely at this point in time, though not impossible.
So why did Netflix stock split in the past?
How a Stock Split Will Affect NFLX Stock Price
As mentioned earlier, Netflix was one of the few tech companies in recent years to split its stock, along with Apple.
The Netflix stock split history includes the July 2015 seven-for-one split that lowered the stock price down from $702.60 per share to its current level. NFLX stock had split one time prior to that as well, in February of 2004, lowering the share price by a factor of two-for-one. (Source: “Is a Netflix Stock Split Likely in 2017?” The Motley Fool, May 8, 2017.)
|Date||Split Ratio||Share Price Before Split||Share Price After Split||Difference In Market Value|
|February 12, 2004||2-for-1||$71.96||$37.30||4%|
|July 15, 2015||7-for-1||$702.60||$98.13||(2%)|
While most stocks see relatively little movement in their stock price when they split, Netflix’s move had quite the opposite effect.
Consider that Apple did not see nearly as dramatic a difference in the aftermath of its stock split.
This may be another reason that Netflix is wary of splitting its stock for a third time.
While there are gains to be had from a Netflix stock split date 2017, the risk of upsetting its powerful run in the year or so would be an unwelcome development.
Netflix Stock Prediction
We’re unlikely to see a NFLX stock split 2017, that much is true, but that doesn’t mean that Netflix isn’t worth looking at.
The company has become one of the strongest performers in the tech industry, gaining over 77% in the past 12 months and over 25% year-to-date.
The company has carved out a strong footing for itself in the streaming world, where even upstart challengers like “Amazon Prime Video” have been unable to do much to slow down the behemoth.
Looking at the Netflix stock chart, there are a lot of reasons for an investor to be excited about the future of the shares.
First, look at the social impact that several of Netflix’s latest programs have managed to have. Shows like House of Cards, Stranger Things, The Crown, Orange is the New Black, Master of None, and a great many others have been able to become cultural touchstones, expanding across demographics and becoming “must-watch TV,” or at least the streaming equivalent.
Stocks have even been known to rise when a Netflix show catches on in popularity, with last year’s breakout success Stranger Things showing a pretty steady correlation between the show’s popularity and NFLX gains.
There is simply no other company around at the moment that can match Netflix when it comes to success with its original programming. Sure, Amazon Prime, cable companies with streaming services, and a whole slew of other competitors are gunning to dethrone Netflix, but, frankly, none are even close.
Netflix’s earnings reports have been solid, showing strong gains year-over-year, coupled with constant expansion into new markets.
From 2015 to 2016, Netflix saw revenue grow to $8.83 billion, up from $6.8 billion the year before. (Source: “Netflix’s annual revenue from 2002 to 2016 (in million U.S. dollars),” Statista, 2017.)
Netflix is on a roll for the time being, and is not going to be stopped in the streaming world anytime soon.
The quality of its original programming is unparalleled at the moment, the strength of its business model so far proving to be in the right direction. Remember that there are no ads on Netflix, making its revenue model entirely subscription-based.
As such, the company has an interesting ace in the hole should it ever decide to switch up its business model and include advertisements. Although unlikely, at least for the time being, it does give the company an interesting tool to play around with if need be.
Which all goes to show that Netflix is a solid company poised for strong gains in the near and long term. There will probably not be a NFLX stock split in 2017, but there is no real reason for the company to do so at the moment. The programming is strong, the company’s reputation is stellar and, most important for investors, we’re seeing pretty consistent growth in the market.
Streaming has come to dominate the way we consume what was once under the sole dominion of television. As more cable-cutters make the leap to an online-only viewing setup, Netflix’s share of the market is only likely to increase.
Already the company is being showered with praise as the second season of Master of None recently was released to widespread critical acclaim and popularity among the millennial demographic.
And that is another thing that Netflix has in common with Apple, besides the two companies having had a stock split within the past few years: both have become adept as shapers of culture.
The ability to affect as many people as it does around the globe and generate massive amounts of buzz surrounding its programming, adeptly managing to manipulate the viral age for its own gain, shows a level of strength within the business that many companies would dream of attaining.
With a strong user base, an even stronger product, and a well-managed company, Netflix may not see a stock split in 2017, but you are going to see another year of gains for NFLX stock.