Media
Will the Netflix Stock Split Overcome Valuation With Earnings?
Published:
Last Updated:
Netflix Inc. (NASDAQ: NFLX) is flying high in 2015, as shares have about doubled in the past six months alone. As a result of this growth, the company decided to split its stock effective in the coming week. At the same time, Netflix will be reporting earnings, which will most definitely affect how shares will move after the split.
In late June, the company announced that its board of directors had approved a seven-for-one stock split. This split will be effected in the form of a stock dividend of six additional shares of common stock for each outstanding share.
The stock dividend will be payable on July 14, for shareholders of record at the close of July 2. Shares will begin trading at a post-split price on July 15.
The company is scheduled to report its second-quarter earnings on June 15. The consensus estimates from Thomson Reuters call for $0.31 in earnings per share (EPS) on $1.65 billion in revenue. The same period from last year had $1.15 in EPS on $1.34 billion in revenue.
ALSO READ: Can New Chicago Taxes on Netflix, Apple, Spotify Withstand Legal Challenges?
Previously, Oppenheimer reiterated an Outperform rating and increased its price target to $775 from $610. The brokerage firm bases this on its estimate that Netflix’s five oldest markets — the United States, Canada, Brazil, the United Kingdom and Ireland — will end 2015 at an average broadband penetration rate of 30%. Oppenheimer’s revised model now estimates 2020 global subscribers at 239 million, or 32% penetration of broadband homes, consistent with 2015 rates in older markets.
Back in January, Netflix announced that its global expansion to 200 countries should be complete by the end of 2016. The company cited the general growth of the Internet, including smartphones, tablets and smart TVs, as the main driver of global expansion. Currently, Netflix is available in 61 countries, and it has announced plans to expand into an additional four, for a total of 65 countries by the end of 2015.
The stock continues to be a top media play on Wall Street. The consensus on Wall Street is that Netflix likely will continue to benefit from a materially stronger original content launch, which would bolster the already strong franchises like the hit political show “House of Cards.” With many consumers tired of rising cable and carrier content prices, the streaming leader may have a big 2015 in front of it.
A few other analysts weighed in on Netflix prior to the split as well:
ALSO READ: Analyst Sees No Tech Bubble: 4 Stocks That Survive and Thrive
Shares of Netflix closed Thursday up 2.4%, at $670.09 in a 52-week trading range of $315.54 to $706.24. In early trading indications Friday, shares were up 1.7% at $681.25. The stock has a consensus analyst price target of $638.57.
If you’re like many Americans and keep your money ‘safe’ in a checking or savings account, think again. The average yield on a savings account is a paltry .4% today, and inflation is much higher. Checking accounts are even worse.
Every day you don’t move to a high-yield savings account that beats inflation, you lose more and more value.
But there is good news. To win qualified customers, some accounts are paying 9-10x this national average. That’s an incredible way to keep your money safe, and get paid at the same time. Our top pick for high yield savings accounts includes other one time cash bonuses, and is FDIC insured.
Click here to see how much more you could be earning on your savings today. It takes just a few minutes and your money could be working for you.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.