When Netflix Inc. reports its latest quarterly earnings later this week, investors will scrutinize more than just subscriber additions and revenue growth. After a remarkable rally that pushed its stock price above $700 earlier this year — and a steady climb since — speculation has grown that Netflix management could announce a stock split alongside earnings results.
The streaming giant last split its stock nearly a decade ago, when it executed a 7-for-1 split in July 2015 as the share price crossed $700. Now, with its stock having regained that lofty level after years of volatility, some investors are asking: Is Netflix ready for another split? And more importantly, do its fundamentals justify continued optimism?
This article examines Netflix’s recent performance, the rationale and implications of a possible stock split, and what investors should watch for in the upcoming earnings release — concluding with a clear verdict on whether the stock remains a compelling buy at these levels.
Netflix’s Meteoric Comeback: Back at $700
For much of the past decade, Netflix has been the quintessential growth stock. From a DVD mail-order business to the world’s leading streaming platform, the company has transformed both its industry and its own fortunes.
After peaking in late 2021, however, Netflix shares fell more than 50% over the course of 2022, as subscriber growth stalled, competition intensified, and valuation multiples contracted amid rising interest rates.
But Netflix executed a deft turnaround strategy:
✅ Crackdown on password sharing, converting millions of freeloaders into paying subscribers.
✅ Launch of an ad-supported tier, opening new revenue streams and appealing to cost-conscious consumers.
✅ Continued global expansion and selective content investments, yielding blockbuster hits while keeping costs under control.
As a result, the company returned to consistent subscriber growth and margin expansion. Its stock has more than doubled from its 2022 lows, once again topping $700 per share — reviving chatter of a split to make shares more accessible to retail investors.
Why a Stock Split Now?
A stock split does not fundamentally change a company’s valuation or financial health — it simply increases the number of shares outstanding and lowers the nominal price per share. Still, splits often carry psychological benefits: lower share prices can attract retail investors, enhance liquidity, and signal management’s confidence in the company’s future.
When Netflix announced its last split in 2015, the stock price was hovering around $700. Since then, the company has grown dramatically — revenue more than quadrupled, net income rose nearly tenfold, and its global subscriber base more than doubled.
In today’s market environment, other high-profile names like Nvidia, Amazon, and Alphabet have also executed splits to accommodate retail investor demand and maintain momentum. Netflix could reasonably follow suit.
Investors should watch CEO Ted Sarandos’ and CFO Spencer Neumann’s commentary closely for hints of a potential split during the earnings call. Even if not announced immediately, such a move remains plausible later this year.
Can Strong Results Justify a Stock Split?
Stock splits are often seen as a management signal of confidence, but they are typically more cosmetic than substantive. Still, strong earnings results can provide the justification — and the right timing — for such an announcement.
In Netflix’s case, the company has demonstrated significant operational progress over the past six quarters: subscriber growth has resumed after stagnating in 2022, profit margins have stabilized despite rising content costs, and its advertising-supported tier has opened a promising new revenue stream. Earnings per share have also rebounded strongly, with analysts expecting a year-over-year EPS increase of close to 20% this quarter.
Management is likely aware of the symbolic power of a split, particularly when coupled with robust results. The last time Netflix executed a split, in 2015, it was after several quarters of record subscriber additions and international expansion — which helped sustain investor enthusiasm despite the stock’s lofty valuation.
This time around, with the stock back above $700 and fundamentals pointing to healthy, if more modest, growth, a split would serve to reaffirm management’s confidence in the company’s trajectory while making shares more accessible to retail investors who may be priced out at current levels.
That said, investors should be careful not to conflate a split with business improvement. A split is only as good as the underlying performance it reflects — and as long as Netflix continues to deliver strong revenue, profit, and subscriber numbers, a split could reinforce positive momentum. If the earnings miss expectations, however, a split may do little to offset the disappointment.
In short, strong results would provide the right backdrop for a stock split, making it more than just a symbolic gesture and helping align investor sentiment with the company’s financial trajectory.
What to Expect From Earnings
Beyond the stock split speculation, investors must keep their eyes on the actual earnings fundamentals. Analysts expect Netflix to report:
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Revenue: ~$9.8 billion, up about 14% YoY
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EPS: ~$4.72, up nearly 20% YoY
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Subscriber additions: ~5 million net new global subscribers
The key questions: 🔷 Will the ad-supported tier sustain its early momentum? 🔷 Can Netflix maintain operating margins above 20% despite heavy content investments? 🔷 How are churn rates evolving as the password-sharing crackdown matures?
On the last earnings call, management guided for modest subscriber gains in mature markets, with growth concentrated in Asia and Latin America. Investors will want to see evidence that these regions are offsetting saturation in North America and Europe.
Content is another area of scrutiny. Big hits like Bridgerton, Stranger Things, and Squid Game have boosted engagement, but competition for talent and rising production costs remain headwinds.
The Rationale for Optimism
Netflix’s core competitive advantages remain intact: ✅ A massive and growing global subscriber base of ~270 million. ✅ Best-in-class data analytics and recommendation engines to drive engagement. ✅ A diversified revenue model that now includes advertising and gaming.
The ad-supported tier is particularly promising, with management estimating a potential $10 billion incremental opportunity over the next few years. Margins have also expanded as content spending growth moderates and scale efficiencies kick in.
Wall Street has responded positively: the stock trades at ~35x forward earnings — expensive compared to the S&P 500 but reasonable for a company growing earnings at a 20%+ clip.
Reasons for Caution
However, risks abound:
⚠️ Competition: Disney+, Amazon Prime Video, Apple TV+, and regional players are all vying for viewer attention.
⚠️ Economic Sensitivity: Consumers may cut discretionary spending on streaming services in a downturn.
⚠️ Content Costs: Securing hit shows and movies is expensive, and flops can drag down ROI.
⚠️ Valuation: At ~35x forward earnings, Netflix is priced for perfection.
Investors should also note that stock splits tend to have only short-lived effects on share prices. Long-term performance will depend on whether the company can sustain subscriber and earnings growth.
Verdict: Buy, Sell, or Hold?
At ~$700/share, Netflix is no longer the deep bargain it was in 2022. But it remains a fundamentally strong company with durable competitive advantages, improving profitability, and credible long-term growth levers.
For long-term investors, Netflix remains a buy on pullbacks. A stock split — if announced — could create temporary upside and attract fresh retail interest. However, at current levels, the stock looks closer to fairly valued than undervalued.
For those already holding shares, it is reasonable to hold and watch for opportunities to add on weakness.
Short-term traders looking to capitalize on a split announcement should tread carefully — the stock could just as easily sell off after earnings if results disappoint.
Intrinsic Value and Entry Price
Using a discounted cash flow (DCF) analysis, assuming:
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10% revenue CAGR for the next 5 years.
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22% long-term operating margins.
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10% WACC.
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3% terminal growth.
We estimate Netflix’s intrinsic value at ~$650–675/share.
Given that the stock currently trades around $700, it is priced slightly above intrinsic value — suggesting limited near-term upside.
A more attractive entry price for new investors would be in the $600–625/share range, providing a modest margin of safety.
Conclusion: Takeaways for Investors
Netflix has engineered an impressive turnaround, proving its resilience in the face of fierce competition and industry disruption. Its global scale, diversified revenue model, and innovative strategies position it well for the future.
A stock split announcement would be a welcome gesture, likely improving liquidity and sentiment — but it doesn’t change the fundamentals. Investors should base their decisions on earnings power, competitive dynamics, and valuation, not headlines.
Key takeaways:
✅ Netflix’s fundamentals remain strong, but the stock is no longer cheap.
✅ A stock split is possible, but won’t materially impact intrinsic value.
✅ Current holders can stay put; new investors should wait for a pullback.
✅ Entry range: $600–625/share for long-term investors.
For now, Netflix remains a leader in streaming and a worthy long-term holding — but patience and discipline are warranted at current valuations.
Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.
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