Netflix's 10-for-1 Stock Split: Don't Fall for the Hype
Alright, let's get one thing straight right off the bat: stock splits are B.S. Pure and simple. Netflix is doing a 10-for-1 split? Big deal. It's like cutting a pizza into smaller slices and expecting it to feed more people. It's the same damn pizza!
Smoke and Mirrors on Wall Street
So, Netflix stock is suddenly "more accessible" because it's trading at a lower price per share? Give me a break. As if the price tag was the real barrier for anyone wanting to invest. The real barrier is whether or not the company is actually worth a damn.
They're trying to tell us that "stock splits correlate with positive future returns." Oh, really? So, basically, if a company is already doing well, splitting the stock makes it do even better? That's like saying if I buy a winning lottery ticket, buying more lottery tickets will make me even richer. Makes perfect sense... not.
And don't even get me started on the "psychological" impact of a lower share price. Are we really this gullible? Do investors just see a lower number and suddenly throw their money at it without doing any actual research? Apparently, that's what these Wall Street geniuses think. I swear, sometimes I feel like I'm the only sane person left in this clown show.
Netflix's third-quarter earnings were "respectable," huh? Sales jumped 17.2%. Okay, that's cool, I guess. But they had the Canelo vs. Crawford boxing match. I missed it. Was it any good? Actually, I don't even care. I'm too busy trying to figure out if this stock split is just a giant distraction from something else.
The Numbers Don't Lie (But They Can Be Misleading)
The real kicker here is the valuation. A forward P/E of 37? For a company that only grew net income by 8%? That's insane! Nvidia is growing way faster and their P/E is lower. What am I missing here? Is everyone else drinking the Kool-Aid?
Netflix is betting big on international markets, especially India. They've got 10 million users in a country of 1.45 billion people. Room for growth, sure. But it's India. Will they actually pay for it, or will they just share passwords with their entire extended family? Oh wait, Netflix is cracking down on password sharing, aren't they? So, they giveth, and they taketh away.
And let's not forget the ad-supported tier. Supposedly, it's a "big success." They expect it to double this year. But they don't tell us how much it's actually generating. Convenient, ain't it? I bet it's not nearly as impressive as they want us to believe.
All that said, Netflix has been widening its operating margins, and management expects a 2025 operating margin of about 29%, up from last year's 27%. But is that enough to justify the current valuation? I don't know, man. I really don't.
The Data Has Spoken (and It's Not Pretty)
Here's the real problem: high-priced stocks that split tend to underperform in the short term. The data shows it. And Netflix is about as high-priced as it gets. So, all this talk about "accessibility" and "positive momentum" is just a bunch of hot air.
Large-cap stocks that were priced above $400 before the split? They average a loss of 2.82% over the next three months. Buying the S&P 500 would have been a better bet. Buying Netflix 10-for-1 Stock Split? Expect Underperformance
Then again, maybe I'm just being too cynical. Maybe this stock split will magically make Netflix a better investment. Maybe pigs will fly, too.
So, What's the Real Story?
Look, I ain't gonna lie. I'm not buying it. This whole stock split thing is a distraction. The fundamentals don't justify the hype. If you're already holding Netflix, fine. But don't go rushing out to buy it just because the stock price is lower. You're better off throwing your money at something else... anything else.