Netflix Predicted to Split Stock in 2025
Netflix (NASDAQ: NFLX) is anticipated to be the next mega technology company to split its stock in 2025, following in the footsteps of other ‘Magnificent Seven’ stocks like Tesla, Apple, and Amazon. The company’s stock has been on a significant growth trajectory, with revenue climbing from less than $10 billion 10 years ago to over $40 billion in the past 12 months. Operating income has also seen substantial growth, reaching over $11 billion.
Steady Growth and Expansion
Netflix’s consistent growth has been a hallmark despite macroeconomic challenges. The company boasts over 300 million global paid streaming memberships as of 2024, with significant room for expansion, particularly in regions like Asia where it had fewer than 60 million subscribers at the end of 2024. Netflix is diversifying its revenue streams by venturing into live events and sports content, having successfully streamed Christmas Day NFL games and securing a long-term contract with World Wrestling Entertainment (WWE).
The introduction of an advertising tier at $8 per month in the U.S. has seen 40% of new subscribers opting for this plan. While the exact advertising revenue figures are not disclosed, there’s considerable potential for growth in this area given the high viewership.
The Truth About Stock Splits
While Netflix is likely to split its stock in 2025 due to its high stock price approaching $1,200, investors should understand that a stock split does not affect the company’s underlying business or market capitalization. It merely divides the existing shares into smaller units. With a current market cap of about $500 billion and a price-to-earnings ratio (P/E) of 56, Netflix stock is considered expensive.
Investment Considerations
Despite its growth, the high valuation raises concerns about its attractiveness as a buy today. The Motley Fool Stock Advisor team did not include Netflix in their recent list of top 10 stocks to buy, highlighting that there are other potentially more lucrative investment opportunities available.
Investors are advised to exercise caution and consider alternative investments. The Motley Fool has positions in and recommends Netflix, Amazon, Apple, and Tesla, and has a disclosure policy for such holdings.
