Will Netflix Potentially Divide Its Stock Shares This Week?
Netflix's Q4 Showdown:
It's crunch time for Netflix (NFLX 1.87%). Known for revolutionizing premium video streaming, this world leader is set to reveal its fourth-quarter earnings on the first trading day of the shortened holiday week. With shares soaring like a blockbuster hit, expectations are sky high.
Netflix stock has been on a record-breaking binge, skyrocketing 83% in 2024 and reaching a new high last month. The streaming giant is now just 17% away from crossing the $1,000 milestone, a feat that could be within reach if this Q4 report excels. Analysts predict shares will touch the four-digit mark later this year if this week's results are impressive.
Time for Splits
Netflix has big shoes to fill. Analysts expect the platform to exceed last quarter's 15% revenue growth (15% year-over-year jump in Q3) with a 14% increase to $10.1 billion in this round. And the profits should make a jaw-dropping comeback, nearly doubling from $2.43 per share in Q3 to $4.20 per share this quarter. Netflix is renowned for beating profit estimates in the past three quarters, so a strong quarter is practically guaranteed.
Should Netflix pull off another stunner, why not spice things up with a stock split? Here's why:
- Bragging Rights, No Prices:Optics play a vital role in the price-sensitive consumer-facing industry. Netflix can avoid the unnecessary burden of celebrating highly successful profits with a gargantuan share price. While the rise in prices won't deter pay-subscribers, any future price hikes could spark protests.
- Making it Mainstream:Stock splits make the shares more accessible to smaller investors. Fractional shares have made purchasing stocks hassle-free, so a lofty share price shouldn't stand in the way of small investors. However, a high share price does restrict trading to affluent individuals, something Netflix might not want to encourage.
- The Time is Right:Netflix has only split its shares twice, but both times it was in response to lower share prices. A 7-for-1 stock split in the summer of 2015 was its last time. With the overall market competition losing steam, now seems like an ideal time to announce another split and signal optimism for future growth.
Netflix counts 283 million paid subscribers and is on a roll with 11-13% revenue growth projected for 2025. Earnings per share could surge 20% in 2025, propelling the company's prosperity further. If Netflix delivers another phenomenal quarter, the much-anticipated split may be just around the corner. No pressure, Netflix. No pressure.
Given the current momentum of Netflix's stock and the anticipation surrounding its Q4 earnings, there are discussions about the potential benefits of a stock split. Here are two sentences that incorporate the given words:
In light of Netflix's record-breaking performance in 2024 and its close approach to the $1,000 milestone, some analysts are suggesting a stock split to make the shares more accessible and attractive to a wider range of investors.
Should Netflix exceed expectations in its Q4 earnings, the possibility of a stock split to alleviate the high share price and facilitate greater investor participation becomes an increasingly intriguing financial strategy.
