Netflix Is Soaring: Will the Streaming Giant Split Its Stock Again in 2025?

Source The Motley Fool

Netflix (NASDAQ: NFLX) has shown investors once again who's on top of the streaming industry. On Jan. 21, the company reported its Q4 2024 earnings, and they were a doozy. Revenue growth accelerated, profit margins climbed higher, and total streaming membership surpassed 300 million.

Unsurprisingly, Netflix stock soared in the days following this announcement. It currently sits at a price just below $1,000 per share, a point where companies often start thinking about a stock split. Netflix has already split its stock twice before, and it could do so again in 2025 if shares continue to rise.

Start Your Mornings Smarter! Wake up with Breakfast news in your inbox every market day. Sign Up For Free »

Stellar Q4 earnings results

The fourth quarter was another astounding one for Netflix. It added 18.9 million subscribers to end the year with 301.6 million paid memberships. The low-cost ad-supported tier and addition of live events like NFL football games continue to attract audiences around the globe. Revenue grew 16% year over year to $10.2 billion, while operating income climbed 52% to $2.2 billion.

Earnings per share (EPS) -- the key driver of stock returns over the long haul -- have grown 3,550% in the last 10 years and reached $19.83 in 2024. Compared to a share price of almost $990 as of this writing, Netflix's price-to-earnings ratio (P/E) is currently 50. Investors are paying a premium for the leadership and growth at Netflix, which is not surprising given its impressive track record.

Management thinks there's plenty of room to extend its growth. It has room to invest outside of the U.S.; it's working on monetization for its ad-supported tier; and it has the capital to invest in live events and sports. Netflix estimates it captures only 6% of entertainment spending in the markets it operates in (excluding Russia and China). If it can grow that number going forward, that's a lot of additional revenue the company can earn in the years to come.

Rising share price and an increasing likelihood of a share split

Netflix previously split its stock in 2015 when it was trading around $700 per share. Since then, it has gained nearly 900%. With shares about to break into the four-figure range, management is likely considering another split. It's difficult for a company to gift out stock options and attract all types of investors when the share price is over $1,000.

NFLX Chart

Data by YCharts.

What to focus on instead of a Netflix stock split

While it's quite possible Netflix splits its stock in 2025, it's not a certainty. Fortunately, the company's decision on this matter will have little effect on the long-term performance of the stock.

Wait, what? Don't stock-split stocks outperform? The empirical data says they do, but that doesn't mean a stock split is responsible for the outperformance. That's usually due to the strong results that are fueling the stock's gains in the first place.

What matters more to your returns over the long haul is the price you pay for the stock and the company's earnings growth when you hold it. In that context, Netflix's high valuation and mature business lead me to believe it's best for investors to stay away from the stock at the moment. It doesn't mean you should sell your stake if you're already a shareholder, but given the market's very high expectations right now, I'm not a buyer at today's prices.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

  • Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $311,343!*
  • Apple: if you invested $1,000 when we doubled down in 2008, you’d have $44,694!*
  • Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $526,758!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

Learn more »

*Stock Advisor returns as of January 27, 2025

Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
Swiss exports crash 36% in the first month of Trump tariffsSwiss exports dropped by 36% in the first month after Trump imposed tariffs.
Author  Cryptopolitan
9 hours ago
Swiss exports dropped by 36% in the first month after Trump imposed tariffs.
placeholder
EUR/JPY appreciates above 163.00 with the Yen retreating across the boardThe Euro is trading higher for the second consecutive day, still fuelled by the delay of Trump’s deadline to avoid 50% tariffs in the US, while the Yen declines alongside super long-term Japanese yields.
Author  FXStreet
10 hours ago
The Euro is trading higher for the second consecutive day, still fuelled by the delay of Trump’s deadline to avoid 50% tariffs in the US, while the Yen declines alongside super long-term Japanese yields.
placeholder
Gold extends correction amidst trade optimism, stronger US DollarGold (XAU/USD) price extends correction, sliding below the $3,300 mark at the time of writing on Tuesday amid improving risk-on mood and a stronger US Dollar (USD). 
Author  FXStreet
10 hours ago
Gold (XAU/USD) price extends correction, sliding below the $3,300 mark at the time of writing on Tuesday amid improving risk-on mood and a stronger US Dollar (USD). 
placeholder
Bitcoin (BTC) To Continue Price Discovery Rally If It Holds These Levels – AnalystAs Bitcoin (BTC) attempts to turn the $110,000 resistance into support, some analysts believe its price discovery rally has just started, forecasting new highs for the flagship crypto.
Author  NewsBTC
10 hours ago
As Bitcoin (BTC) attempts to turn the $110,000 resistance into support, some analysts believe its price discovery rally has just started, forecasting new highs for the flagship crypto.
placeholder
Forex Today: US Dollar rebounds after long weekend, focus shifts to mid-tier US dataThe US Dollar (USD) benefits from the improving risk mood early Tuesday, while trading conditions normalize following a three-day weekend in the US.
Author  FXStreet
11 hours ago
The US Dollar (USD) benefits from the improving risk mood early Tuesday, while trading conditions normalize following a three-day weekend in the US.
goTop
quote