This article first appeared on GuruFocus.
Netflix (NASDAQ:NFLX) shares rose about 3% on Friday morning after the company said it will move forward with a 10-for-1 stock split
The split will provide nine additional shares for every share currently owned. Netflix said the decision is intended to lower the trading price to a range that may help employees participating in its equity compensation programs.
Netflix last closed at US$1,089. On a split-adjusted basis, the price would be around one-tenth of that level. The newly adjusted shares are expected to begin trading on Nov. 17.
Stock splits do not alter a company’s overall market value, but they increase the number of shares outstanding. Analysts often view them as a signal of management confidence in long-term performance.
This marks the company’s third split since its 2002 IPO. Netflix previously completed splits in 2015 and 2004 as its streaming business expanded.
The company has been one of the strongest performers in the U.S. entertainment sector over the past two decades, supported by subscriber growth and rising revenue from its global streaming platform.
