Some companies create so much value over the long term that their stock price surges into the hundreds, or even thousands, of dollars. This makes it hard for retail investors with small portfolios to buy one whole share, so if their broker doesn't offer fractional share trading, they could miss out on the opportunity entirely.
A company can remedy this problem by executing a stock split, which increases the number of shares in circulation and proportionately decreases the price per share. For instance, a 10-for-1 stock split would increase the company's share count tenfold, while reducing the price of a single share by 90%. It doesn't change the value of the underlying company; it just enables investors to buy shares at a much lower price point.
Netflix (NFLX +1.34%) stock has traded at over $1,000 for most of this year, so many investors have been eagerly awaiting a split. They are about to get their wish, because the company will execute a 10-for-1 split after the market closes this Friday, Nov. 14, and its stock will then commence trading on a split-adjusted basis on Monday, Nov. 17.
Netflix stock is up 103,000% since it went public in 2002, and this will be its third split. The company probably isn't done creating value for investors, so is the upcoming split an opportunity to buy?
Image source: Netflix.
Netflix is a value-creating machine
Netflix operates the world's largest streaming platform for movies and television shows. It had over 300 million subscribers at the end of 2024, and while the company no longer discloses its membership numbers, top competitors like Disney's Disney+ and Warner Bros. Discovery's HBO Max still have less than half as many subscribers, according to their most recent disclosures.
Thanks to its immense scale, Netflix is one of the few pure-play streaming companies generating a profit. It brought in $10.4 billion in net income on $43.3 billion in revenue over the last four quarters, which means it can comfortably outspend its competitors to create and license content, which cements its dominance even further.
Plus, Netflix's revenue growth is accelerating at the moment. In fact, its top line increased by 17.2% in the recent third quarter of 2025 (ended Sept. 30), which was the fastest pace in four years (since the second quarter of 2021).
A couple of things are driving that momentum. First, back in 2022, Netflix launched a new subscription option for just $7.99 per month, which is much cheaper than its Standard ($17.99 per month) and Premium ($24.99 per month) tiers. It's supplemented by advertising, so even though the membership price is much cheaper, Netflix makes up the difference by selling ad slots to businesses.
It has been wildly successful, because the ad tier consistently accounts for more than half of all signups in countries where it's available. Moreover, Netflix's advertising revenue doubled in 2024, and is on track to more than double again in 2025.
Second, Netflix is also betting big on live events, which often attract new members. It exclusively streamed several blockbuster boxing matches in 2024 and 2025, including Mike Tyson vs. Jake Paul, and Canelo Álvarez vs. Terence Crawford. The latter became the most-watched bout this century, with 41 million viewers. Netflix also exclusively streamed both Christmas Day National Football League (NFL) games last year, and will do so again this year.
NASDAQ: NFLX
Key Data Points
Stock splits can lead to upside, so should investors buy Netflix?
A stock split doesn't change the value of the underlying company at all, but a stock can experience gains after a split, as investors who were previously priced out of ownership start buying in. However, when it comes to Netflix specifically, I think investors should take a much longer-term view.
Netflix stock is trading at a price-to-earnings (P/E) ratio of 46.1, which is slightly higher than its three-year average of 44, so investors probably shouldn't expect blistering gains over the next few months.
However, according to Yahoo! Finance, Wall Street thinks Netflix could grow its earnings to $32.30 per share in 2026 (or $3.23 after the 10-for-1 stock split takes effect), placing its stock at a forward P/E ratio of 34.
NFLX PE Ratio data by YCharts
In other words, Netflix stock will have to gain 29% before the end of next year just to keep its P/E ratio in line with its three-year average of 44. Its stock would have to gain 35% to maintain its current P/E ratio of 46.1, which isn't out of the question because investors often pay a premium when companies are carrying significant momentum.
But investors who are willing to hold Netflix stock for an even longer period of five years could do even better, because it will give initiatives like the advertising business time to mature.
