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Netflix announced a 10-for-1 stock split Thursday, a move that changes nothing fundamentally about the company, but could make the pricey individual shares more accessible to the retail investor.
Existing shareholders as of Nov. 10 will receive nine additional shares for each one they hold. They’ll get that allotment on Nov. 14, and the stock will begin trading at the new post-split price on Monday, Nov. 17.
Netflix, the streaming leader whose shares have boomed over the last three years to above $1,000 apiece, said it was making the change to “reset the market price of the Company’s common stock to a range that will be more accessible to employees who participate in the Company’s stock option program.”
Netflix shares added more than 2% after hours on the split announcement. The stock closed Thursday at $1,089 a share, up 42% for the year.
Netflix, 5 years
The stock is currently one of 10 stocks in the S&P 500 with a price above $1,000.
It’s common practice for companies that reach those levels to split the shares, although the effectiveness of such a move is debatable with the widespread use of fractional trading available on brokerage platforms.
A split simply gives each holder more shares at a lower price, while the value of their holding does not change at all. All fundamental measures for the company remain the same.
Warren Buffett has famously refused to split the shares of Berkshire Hathaway for this reason, with the stock priced at more than $717,000 a share. Buffett did create a ‘B’ class of shares that are more modestly priced at $478 each.
Netflix has split its shares twice before, in 2015 and 2004.