Should you buy Netflix before its November 17 stock split? | Colorful fool

High-growth companies often create so much value over the long term that their stock price rises into the hundreds or even thousands of dollars. Investors with small portfolios then find it more difficult to buy a single whole share, so unless their broker offers fractional shares, they could be forced to sit on the sidelines.

A company can mitigate this problem by conducting a stock split that will increase the number of shares outstanding and reduce the price per share proportionately. For example, a 10-for-1 stock split would increase the number of shares in the company tenfold and reduce the price per share by 90%. It does not change the value of the underlying company, but allows investors to buy shares at a much lower price.

Netflix (NFLX 0.13%) shares trade at more than $1,100 (as of Nov. 6), but the company announced a 10-for-1 split last month that will take effect on Nov. 17. This will be the company’s third stock split since going public in 2002, which isn’t surprising considering the 102,570% return since then.

Although a split does not fundamentally add value to the business, the stock often sees gains after the split as investors who were previously priced out of ownership buy in. With that in mind, should investors buy Netflix before November 17?

Netflix is ​​the largest streaming platform in the world

Netflix had over 300 million subscribers at the end of 2024, making it the largest streaming platform for movies and TV shows in the world. While the company no longer discloses its membership numbers, its key competitors — Walt Disney — was still lagging behind with just 128 million Disney+ subscribers as of June of this year.

Netflix continues to attract new members through a variety of innovative strategies. First, in 2022, it launched a more affordable ad-supported subscription tier for just $7.99 per month.

The offer now regularly accounts for half of new sign-ups in countries where it’s available, and each member becomes more valuable over time because Netflix can charge companies more money for ad slots as its user base grows. Last year her advertising revenue doubledand is set to more than double again in 2025.

Today’s Change

(-0.13%$-1.40

Current price

$1097.06

Key data points

Market capitalization

465 billion dollars

Daily range

$1085.21 -$1103.64

Range 52 weeks

$788.65 -$1341.15

Volume

217 thousand

Avg. flight

3.5 million

Gross margin

48.02%

Dividend yield

ON

Live programming is another big draw for new members. Last December, Netflix was the exclusive network for both National Football League (NFL) Christmas Day games, and both drew over 30 million viewers, making them the most streamed games in the sport’s history. The platform is set to host both games again this coming Christmas Day.

Netflix is ​​also betting big on boxing. Last November, it exclusively aired Jake Paul vs. Mike Tyson, which was a raging success. This was followed by several bouts in 2025, including Canelo Álvarez vs. Terence Crawford in September, which attracted a record 41 million viewers, the most for a male title this century.

Should you buy Netflix before the stock split?

Netflix has become a financial powerhouse. During the third quarter of 2025, it generated $11.5 billion in revenue, up 17.2% from the previous year. This was the fastest growth rate in four years (from the second quarter of 2021), underscoring the success of initiatives such as advertising and live streaming.

The company is also one of the few pure-play streaming providers to generate consistent profits, with net income of $10.4 billion in the past four quarters alone, translating to earnings of $23.94 per share. This allows the company to outspend its competitors in creating and licensing content, cementing its dominance.

With all that said, stocks aren’t cheap. At the time of writing, it trades at a price-to-earnings (P/E) ratio of 45.9, a hefty premium to the P/E ratio of 34.7 Nasdaq-100 index. In other words, Netflix is ​​significantly more expensive than many of its peers in tech and technology-adjacent industries, so short-term investors expecting big gains in the next few months may be disappointed.

However, the Wall Street consensus estimate (provided by Yahoo! Finance) suggests that Netflix will grow its earnings to $32.34 per share in 2026 ($3.23 after a 10-for-1 stock split), putting its stock at a forward P/E of 33.9.

Data by YCharts.

That means the stock will need to rise 35% by the end of next year just to maintain its current P/E of 45.9. Despite being more expensive than the Nasdaq-100, this scenario is not out of the question, as Netflix’s P/E multiple has averaged around 44 over the past three years.

But long-term investors willing to hold onto Netflix stock for the next five years or more should enjoy the best returns, as that time frame will give the company’s ad business the runway it needs to grow and mature.

In short, whether investors should buy Netflix before November 17 — the first day of trading after the 10-for-1 split — depends entirely on their time horizon. Short-term investors might want to stay away, while their long-term counterparts could do very well in the coming years.