Netflix Inc. is looking to raise its share authorization by approximately30 times, according to a document company registered with regulators. The online video on demand subscription is forcing shareholders to support the significant share authorization increase, this is a step which most believes might lead to a possible stock split.
The online streaming giant is expecting to grow its shares authorization from a simple 170 million presently, to a better 5 billion, according to regulatory filing. Shareholders are most likely to vote in favor of the authorization at the annual general meeting of the company, scheduled to be take place on June 9.
Netflix Inc. expects the move might help the company to gain better payment flexibility of dividends and also to have better equity financing. However, the company has not planned to issue shares for mergers or financing, the authorization increase might support in generating money with more flexibility, for option grants and acquisitions.
The stock price has traded much above the mark of $300 for over a year and a half. The step to pursue increased share authorization shows the company’s plan to a possible stock split. Majority of Wall Street research analysts are also expecting Netflix to do the same. Paul Sweeney, an analyst at Bloomberg intelligence, states: “The Company is preparing for a stock split, and would like to make its shares more attractive to retail investors. Reducing the ‘per share price’ via a stock split is one way to do that.”
Netflix Inc. shares went higher 3.4% and reached $454.57 at market clos e on Friday, roughly 7% less than its high of $489.29 in September last year. Because of the rising competition in the streaming market by Amazon Prime’s Instant video and HBO Now, the company’s shares have been unstable in the last few months. Yet, the stock have still able to record gains of almost 32% this year, although still comparatively lower than its all-time high.
Anne Marie Squeo, a spokesperson at Netflix said during a statement, “At a lower price point, there’s a perception the stock is more accessible.” With almost 62 million ordinary shares outstanding as Netflix ended its previous year, the step of stock split might be handy to increase the needed financing, especially at the time when the company is seeking aggressive growth internationally.
Netflix stock was up 0.44% to $658.31 at market close on Thursday, July 2. The streaming giant has 52 week low and high of $315.54 and $706.24, respectively.