Netflix Announces 10-for-1 Stock Split to Increase Share Accessibility

Netflix Inc. announced a significant corporate action: a 10-for-1 stock split. This means that for every one share an investor currently owns, they will receive nine additional shares, effectively multiplying their holdings by ten. The company has set November 10 as the record date, meaning shareholders must own shares by this date to be eligible. The new shares will be distributed on November 14, and the stock will commence trading on a split-adjusted basis from November 17.

Why the Split? Netflix states the primary reason for this split is to lower the per-share trading price, making it more affordable and accessible for individual investors, often referred to as retail investors. It also aims to benefit employees who participate in the company's stock options program. With Netflix's share price currently above $1,000, it is one of the more expensive stocks within the S&P 500 index, potentially deterring some smaller investors.

What is a Stock Split? A stock split does not alter the fundamental value of the company or an investor's total stake. It simply increases the number of outstanding shares and proportionally decreases the price per share. For instance, if a stock is trading at $1,000 before a 10-for-1 split, it would trade around $100 per share afterwards, but the investor would own 10 times as many shares. All other company metrics, such as market capitalization and earnings per share, remain the same immediately after the split.

This is the third time Netflix has undertaken a stock split, with prior instances occurring in 2004 and 2015. Following the announcement, Netflix shares saw a 3% rise in extended trading.

Impact This news is primarily positive for the stock's liquidity and accessibility. It doesn't change the company's intrinsic value but can lead to increased trading volume and broader ownership among smaller investors. Rating: 5/10

Definitions: * Stock Split: A corporate action where a company divides its existing shares into multiple shares. The total value of the shares remains the same, but the number of shares increases, and the price per share decreases. * Retail Investors: Individual investors who buy and sell securities for their own accounts, as opposed to institutional investors like pension funds or mutual funds. * Ex-Split: Refers to the date from which a stock begins trading at its new, adjusted price after a stock split has occurred. Shares bought on or after this date will reflect the split.