Netflix Announces 10-for-1 Stock Split. Here's What Investors Need to Know.

There's no denying that Netflix (NASDAQ: NFLX) is one of the most recognized companies in the world. The company dominates the streaming video industry it pioneered. At last count, Netflix has an audience of over half a billion people in 190 countries worldwide, and broadcasts in 50 languages.

The company's impressive business performance has also resulted in a surging stock price. Netflix shares have climbed 44% over the past year (as of this writing), and are up an impressive 116% and 936% over the preceding five-year and 10-year periods, respectively.

In the wake of its third-quarter earnings report, Netflix announced plans to split its stock for the first time in nearly a decade. This stunning revelation has sparked a tidal wave of interest in the tech giant and FAANG stock. It also raises questions of interest to investors, including how a stock split works and what it means for them.

Image source: Netflix.

The specifics

After the market close on Thursday, Netflix announced that its board of directors had approved a 10-for-1 stock split. "The split will be effected through an amendment to the Company's Amended and Restated Certificate of Incorporation," according to the press release. Shareholders of record as of Monday, Nov. 10, 2025, will receive an additional nine shares of stock for each share they own after the close of business on Friday, Nov. 14. The stock is expected to begin split-adjusted trading when the market opens on Monday, Nov. 17.

As is customary, shareholders won't need to take any additional action to participate in the stock split. The brokerage or investment bank will manage the details, and shares will ultimately be deposited directly into their accounts once the stock split has taken effect. To be clear, due to the complexity involved, the additional shares may not show up immediately after the market close on Nov. 14. The schedule could vary slightly from brokerage to brokerage, and it may take several days before the newly minted shares make an appearance.

To provide some much-needed context for the process, let's plug in some numbers. For each share of Netflix stock an investor owns -- currently trading for roughly $1,100 per share (as of this writing) -- post-split shareholders will own 10 shares worth $110 each.

Is a stock split good for investors?

As illustrated in the above example, the total value of the shares owned won't change. One share of Netflix stock priced at $1,100 is worth the same amount as 10 shares worth $110 (10 x $110 = $1,100). Put another way, it doesn't matter if you have one $10 bill or 10 $1 bills; the amount of cash you have to spend is still the same. Likewise, Netflix stockholders will simply have a greater number of lower-priced shares.

However, this is where investor psychology comes into play. It's become clear over the past several years that the excitement sparked by a stock split can ultimately drive up the stock price. Experts also suggest that lowering the price makes the stock more affordable for everyday (read "retail") investors and company employees. In fact, in its press release, Netflix pointed out that the motivation behind its decision was "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."

That said, some believe that the strong performance that led to the stock splits generally continues. Companies that complete stock splits generally deliver stock price gains of 25%, on average, in the year following the announcement, compared with average increases of 12% for the S&P 500, according to data compiled by Bank of America analyst Jared Woodard.

One thing is clear: Over the long term, it's a company's operating performance and financial results that will ultimately drive its stock higher.

Does that mean Netflix stock is a buy?

While the stock split in and of itself doesn't suggest Netflix stock is a buy, there are a host of other reasons to consider investing in the streaming pioneer. The company's recent financial report provides plenty of evidence that the stock is a buy.

For the first nine months of 2025, Netflix generated revenue that grew 15% year over year to $33.1 billion, while its earnings per share (EPS) climbed 26% to $20.12. Perhaps more impressive was the company's operating margin, which has continued to expand, cresting 31.3% this year, up from 27.4% in 2024 and 20.9% in 2023. This illustrates that while Netflix continues to invest aggressively in its content spending, it's becoming more profitable and dropping more to the bottom line.

There are other reasons to be optimistic. Netflix has a number of hit releases scheduled for the fourth quarter, including the highly anticipated final season of Stranger Things, and the latest seasons of fan favorites The Witcher, Nobody Wants This, Emily in Paris, and Love Is Blind. There's also the NFL Christmas Gameday doubleheader, pitting the Dallas Cowboys against the Washington Commanders and the Detroit Lions versus the Minnesota Vikings. Add to that blockbuster movies, including Guillermo del Toro's Frankenstein and Rian Johnson's Wake Up Dead Man: A Knives Out Mystery. There's more, but you get the picture.

Netflix stock is selling for 34 times next year's expected earnings. While that's undoubtedly a premium, I'd argue that it's a fair price to pay for a company that's expected to grow its revenue by roughly 12% annually over the next five years.

To be clear, investors shouldn't buy shares based solely on the upcoming stock split. Rather, it's Netflix's history of robust performance and stellar execution that make the stock a compelling choice.

Bank of America is an advertising partner of Motley Fool Money. Danny Vena has positions in Netflix. The Motley Fool has positions in and recommends Netflix. The Motley Fool has a disclosure policy.