There is way more to these market leaders than their recent (or upcoming) stock splits.
Stock splits happen pretty regularly, but most are conducted by companies with relatively little name recognition. Such moves tend to attract wider attention only when larger, well-established corporations perform them.
And two of the most prominent stock splits in recent memory are those of Netflix (NFLX +2.28%) and Booking Holdings (BKNG +2.07%). While stock splits don’t do anything to alter a company’s prospects, these two are worth investing in for the long haul, regardless of that.
Image source: Getty Images.
1. Netflix
Netflix conducted a 10-for-1 stock split in November. The stock has not performed well since then, however, partly due to its proposed acquisition of most of Warner Bros. Discovery. If that deal goes through, Netflix will fund a significant piece of the purchase with debt.
But the media giant, which is currently trading not far from its 52-week low, still has excellent prospects. First, aside from its proposed acquisition, it remains the leader in streaming, a market that is still underpenetrated globally. Even in the U.S., streaming accounted for less than 50% of television viewing time in December.
True, the competition in that space is fierce, but Netflix has a strong moat thanks to its brand name and network effects. Further, the company is slowly ramping up its relatively new advertising business. Management projects revenues from that source will double this year to $3 billion.
Today’s Change
(2.28%) $1.89
Current Price
$84.58
Key Data Points
Market Cap
$349B
Day’s Range
$82.80 – $85.49
52wk Range
$75.01 – $134.12
Volume
2.9M
Avg Vol
47M
Gross Margin
48.59%
Now, what about the acquisition of Warner Bros.? Netflix would acquire a long list of iconic characters and franchises. The company should milk these for all they are worth, given its ability to create highly successful original content even from scratch.
Lastly, Netflix is increasingly pushing into new corners of streaming, in ways that could boost engagement and attract new customers. For instance, it is growing its presence in sports streaming and dipping its toes in long-form video podcasts.
All these initiatives help strengthen an already robust business. As such, the stock is well positioned to deliver competitive returns through 2036.
2. Booking Holdings
Booking Holdings recently announced a 25-for-1 stock split, to take place in early April. This was a bit of a surprise. Some comments that CEO Glenn Fogel had made in recent years seemed to suggest that, despite the stock’s high price (about $3,870 per share right now), a split was not in the cards.
Today’s Change
(2.07%) $86.31
Current Price
$4249.31
Key Data Points
Market Cap
$132B
Day’s Range
$4165.14 – $4292.10
52wk Range
$3765.45 – $5839.41
Volume
24K
Avg Vol
339K
Gross Margin
97.15%
Dividend Yield
0.92%
Regardless, Booking Holdings’ business is robust, and its prospects for the next 10 years are attractive. The company owns famous travel websites and apps, including Booking.com, Kayak, Priceline, and others. Through them, it helps people access everything from flights and hotels to car rentals and activities.
Booking Holdings benefits from strong network effects: The more that travelers use its websites and apps, the more attractive it is to vendors, and vice versa. It should benefit from growing demand for travel and accommodations, and in addition, its investments in artificial intelligence (AI) are making things easier for its customers.
For all those reasons, the stock looks like a great long-term pick.
