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Will Netflix Stock Split: What You Need To Know

Apr. 05, 2021 3:54 PM ETNetflix, Inc. (NFLX) Stock7 Comments


  • Netflix has split their stock twice in the past, and it has been a positive catalyst.
  • Their unique stock option program makes it more likely they will do so again in the future.
  • Trading at approximately my estimate of fair value, those interested in buying may want to get in ahead of potential news.
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The streaming service Netflix (NASDAQ:NFLX) is ubiquitous, but investors sometimes have less knowledge about its history of splitting its stock. While a stock split doesn't change the inherent value of the underlying firm, some

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Comments (7)

16 Oct. 2021
Thank you for the analysis on the company option program. I'm thinking this next earnings call will be a good time to split it 7 for 1. The current price is approaching the previous split level.
Hudson Investments profile picture
@TJB63 may happen if they want a greater float.
Hudson Investments profile picture
If NFLX plans a stock price split then the April 20, 2021 earnings call may be a great time to announce that.
Hudson Investments profile picture
You shouldn’t but NFLX on speculation that it will split in the near future.
Netflix is a pretty mature and low beta company now so I don't think there would be fireworks after a split but good for +5% over a few days? maybe.
sKibi profile picture
Something that I didn’t know. By making employees buy options, even if they paid those employees the amount they are allowed to buy, then it establishes the w-2 income at today’s price, and the gains over the long term are presumably at capital gains rates, which are historically at lower tax rates than ordinary income. Presumably the company has established the “fair value” of the premium due to some illiquidity considerations so that employees aren’t subject to any other taxable income when they purchase the options, and Netflix doesn’t get the tax deduction of the excess over strike at time of options exercise. This seems to allow employees to enjoy more advantaged tax posture by the company foregoing the tax deductions on the exercise. And it seems fairer to shareholders as the employees don’t get options for “free” and in fact have to pay for their options in after-tax dollars or else have to fund the tax on the w-2 compensation realized in order to “purchase” the option. Thanks for highlighting. This does seem to create incentives for company to make the share price more broadly “accessible” to its employees in terms of the number of options - merely a psychological tool IMO but has value for retention purposes. Thanks
Safety In Value profile picture
@sKibi thanks for commenting! I hadn't thought about the tax angle for employees.
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