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IN PHOTO: Reed Hastings (L-R), founder and CEO of Netflix, Neil Hunt, Chief Product Officer, and Ted Sarandos, Chief Content Officer, attend a red carpet event as Netflix launches its video streaming service in France, in Paris September 15, 2014. Netflix will focus on ramping up in six new European markets in the next year, including France and Germany, before taking the video streaming service to additional countries, its chief executive said in an interview. REUTERS/Gonzalo Fuentes

On Tuesday “Netflix” the video streaming company announced its approval of a seven-for-one stock split which would begin trading at the post split price due on July 15. Forbes reported that the announcements came when the company’ stock gains escalated to 182% over the past year, declaring it to be the fourth highest stock price and the stock price saw an increase of 2.6 percent from 0.9 percent as a result.

The last split which the company approved was back in 2004 with a two-for-1 deal pricing roughly at AU$ 94.35 a share. Fourteen multinational giants that included Google and Apple followed a similar stock split. In the Standard and Poor’s 500, Netflix was one of the top four companies like Berkshire Hathaway, AutoZone (AZO) and Priceline (PCLN) with the highest per share prices. However, on Tuesday post the announcements those shares closed at AU$ 273.79, AU$ 884.48 and AU$ 201.50 respectively.

USA today reported that Netflix’s market value remained AU$ 53.38 billion post the split and currently has 62.3.6 million numbers of shares, almost a million more than it had expected. According to CBC news, Netflix has strongly focused on increasing international growth with every move.

Business analysts suggested that the company might opt for spitting its stock again, similar to other companies in the S&P 500. The company reported that the stock splits were announced to make it more appealing and accessible to individual investors and also to restore faith in the stability of the stock.

After the dot-com boom, many companies witnessed a drop in their stock prices. Google and Apple competed to achieve the highest stock price and Warren Buffett’s Berkshire Hathaway was seen to set a benchmark for the same. However, the image has undergone a transformation after Buffett declared a split that had Berkshire Hathaway’s lower-priced B shares in a 50-for-1 deal in 2010 done in order to finance the AU$ 34.90 billion buyout of Burlington Northern Santa Fe.

Contact the writer on:- priya.shayani@gmail.com

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