Netflix Split: Should You Buy Now?

Netflix (NASDAQ: NFLX) has been a trailblazer in the world of streaming entertainment, offering viewers a wide range of on-demand content for years. Since its IPO over two decades ago, the company’s stock price has skyrocketed by over 100,000%, making it a real millionaire maker.

Currently, Netflix’s share price sits above $1,100, but the company has announced a 10-to-1 stock split to make its shares more accessible to smaller investors, set to take place later this month.

Investor Anthony Di Pizio suggests that while Netflix could be a solid investment, it may be more suitable for long-term investors than those looking for short-term gains. Netflix has seen impressive financial growth, with $11.5 billion in Q3 revenues marking a 17.2% increase year-over-year, its highest growth rate in over four years. Additionally, the company’s $10.4 billion net income over the last twelve months has allowed Netflix to continue creating and licensing content, solidifying its position in the industry.

However, despite its success, Netflix’s valuation is relatively high, with a Price-to-Earnings ratio in the mid-40s, well above the Nasdaq-100 index’s mid-30s. This suggests that short-term investors expecting significant gains in the near future may be disappointed.

On the other hand, investors willing to take a long-term view could see positive outcomes. Netflix’s introduction of a more affordable, ad-supported subscription option has doubled advertising revenues in the past and shows promise for more growth in the future. Additionally, the company’s foray into live programming, including sports events, is attracting a large audience.

Ultimately, whether investors should buy Netflix ahead of the upcoming stock split on November 17th depends on their investment horizon. Wall Street analysts are generally optimistic about NFLX, with a Moderate Buy consensus rating based on 26 Buys, 7 Holds, and 1 Sell. The 12-month average price target of $1,398.59 (pre-split) suggests potential gains of around 30%.

In conclusion, while Netflix’s current valuation may be on the higher side, its long-term prospects and position in the streaming industry make it an intriguing option for patient investors to consider.