ByMark J. Guillen, writer at
Netflix has announced that it will be splitting its stock 7-for-1 so that the stock price goes down, leading to more individuals investing in the company.

Netflix, Inc. announced a 7 for 1 stock split that is going to decrease the stock price, and is going to make the stock more attractive to shareholders or investors. The company realized that the stock is very expensive and requires being more accessible as the company is expanding globally.

The Netflix’s Board agreed that every shareholder on board as at July 2nd, 2015 will be provided 6 additional shares. The dividend is payable on July 14, while the shareholders between 2 to 14 July are going to get a due note, as evidence of their ownership to the additional stock. Companies post stock split trading session will begin on July 15, according with its second quarter earnings release for fiscal year 2015.

Netflix stock closed at $681.19, showing the need for stock split so that it will be available for more investors. The split is also going to help the employees of the company who holds stock option as they will use them more proficiently in the coming future.

Furthermore, the company stated that widely, Netflix has outperformed since first quarter fiscal year 2015, and its stock has increased by 43%. In the similar quarter, the company reported 41.57 billion in revenues, and 67 cents in non-GAAP earnings per share. However, the company was not able to meet the earnings and revenue estimates, the share surged by over 18% in the trading session, because of strong subscription growth.

Merrill Lynch specified: “We think the stock has continued to move higher due to: 1) market expectations of the announced stock split; 2) potential of a partnership with a Chinese media company to open up access to large Chinese market; 3) anticipation of additional country expansion announcements; and 4) strong content releases including Sense8 and soon to be released Wet Hot American Summer potentially driving subscriber growth.”

Moreover, the streaming giant is positive that there is an upside potential in the stock, because of company’s upcoming global launches. At the fourth quarter fiscal year 2014 earnings announcement, the streaming giant said that it wanted to reach to almost 200 countries in the coming 2 years.

The firm reiterated its rating of Buy, with stock price objective of $722. Merrill Lynch sees Netflix in the best place to become a leading media platform.

Twenty four analysts suggests a Buy, 14 gave a Hold and 5 have assigned a Sell rating to the stock of Netflix. The whole year consensus stock price target is $623.15.


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