Netflix announces a 10-for-1 stock split
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netflix It announced a 10-for-1 stock split on Thursday; It’s a move that won’t fundamentally change anything about the company but could make expensive individual shares more accessible to the retail investor.
Existing shareholders will receive nine additional shares for each share they hold as of November 10. They will receive this share on November 14, and the stock will begin trading at the new post-split price on Monday, November 17.
Netflix, the streaming leader whose shares have risen above $1,000 in the past three years, said it made the change to “reset the Company’s stock market price to a range more accessible to employees participating in the Company’s stock option program.”
Netflix shares gained more than 2% hours after the split announcement. The stock closed Thursday at $1,089, up 42% for the year.
On Netflix, 5 years
The stock is currently one of 10 stocks in the S&P 500 priced above $1,000.
It is common practice to split shares for companies that reach these levels, but the effectiveness of such a move is controversial due to the widespread use of fractional trading available on brokerage platforms.
The split gives each shareholder more shares at a lower price, but the value of their holdings remains unchanged. All key measures for the company remain the same.
Warren Buffett famously refused to split stocks Berkshire Hathaway therefore the stock price was more than $717,000 per share. Buffett created class ‘B’ shares priced more modestly at $478 each.
Netflix has split its shares twice before, in 2015 and 2004.
