Could a Stock Division be Imminent for Netflix by 2025?
High-value companies can sometimes become difficult for regular investors to buy due to skyrocketing share prices. This is where a stock split comes in handy. It increases the number of shares while lowering the price per share, making the stock more budget-friendly. Take Netflix, for instance, whose share price is close to reaching the thousand-dollar mark. With its impressive financial performance in 2024, industry observers speculate a potential stock split in 2025.
Netflix added an impressive 18.9 million subscribers in Q4 2024, surpassing expectations, pushing its total subscriber base to a record high of 301.6 million. The streaming giant's success can be attributed to an engaging content slate, a new advertising tier, and the substantial growth in ad subscriptions. The ad tier, launched in 2022, significantly contributed to Q4 2024 sign-ups and allowed customers to enjoy Netflix's full service at a $7.99 monthly fee if they're willing to watch ads.
The result? A 30% increase in ad tier members compared to Q3 2024, while advertising revenue doubled in 2024 and is projected to do so again in 2025. This growth in ad revenue is crucial, as it will make the service more attractive to advertisers as the subscription base expands further.
Live programming looks set to provide another significant boost to Netflix. By streaming NFL games, WWE events, and other live content, Netflix hopes to increase user engagement and, in turn, attract more advertising revenue. This will complement their $18 billion content budget for 2025 and help them remain ahead of the competition while continuing to grow their global market share.
With Wall Street forecasting EPS growth to $24.69 in 2025, and the stock trading at a forward P/E ratio of 39.9, investors might need to watch for a potential stock split in 2025. Previous splits in 2012 and 2015 were successful, making the stock more accessible to retail investors. Market analysts suspect a 10-for-1 split could be next, potentially pulling the price down from $1,000 to around $100 per share, making it more attractive to investors who may otherwise have been priced out.
Given Netflix's impressive financial performance, investors might consider diversifying their portfolio by investing in similar high-value companies. This strategic move can help diversify risk and potentially yield significant returns in the finance industry. With the speculated stock split in 2025, even more investors might find Netflix an attractive investment opportunity, given the lower share price per share.
