We recently published a list of the 12 Stocks to Buy That May Be Splitting Soon. In this article, we are going to take a look at where Netflix, Inc. (NASDAQ:NFLX) stands against other stocks that may be splitting soon.

Stock splits change the number of outstanding shares of a company, but not the company’s overall value. A forward split makes each share cheaper and easier to buy. Splits can range from 2-for-1 to 100-for-1 or more. In a 2-for-1 split, one share becomes two by cutting the price in half. For instance, a $100 share becomes two $50 shares. This makes shares more affordable and attracts more investors. Even though the price per share drops, the total value held by shareholders stays the same. So, splits don’t change who controls the company. The main reason for a split is to make the stock more appealing, or accessible for retail investors.

Uncertainty is Driving Selloff

Dan Suzuki, Deputy CIO at Bernstein Advisors, joined CNBC’s ‘Squawk on the Street’ on March 14 to share his perspective on the recent persistent three-week downtrend in the indexes during an interview. He explained that the sell-off is largely driven by uncertainty and its negative impact on sentiment. According to Suzuki, analyzing market movements reveals that the stocks that rallied most after the election until mid-February have seen significant declines since then and create a mirror image effect. Additionally, the most expensive and high-beta stocks have been hit hardest as the market prices are in an uncertainty risk premium. These dynamics are central to what is driving markets currently. Despite this, Suzuki noted that hard economic data remains strong and suggests that relief from headline uncertainties could reduce the risk premium.

Suzuki noted concerns over soft retail sales and spending figures, which might be due to weather or seasonal factors. However, he highlighted resilience in weekly retail sales and strong leading indicators. Prolonged uncertainty could still impact growth. Suzuki linked consumer trends to disappointing corporate guidance and persistently high inflation, which affected sentiment. He also pointed out the wealth effect caused by a stock market decline of 10% or more, particularly for investors in crowded names. Markets are adjusting to persistent uncertainty, which will continue even with relief anticipated within the next month or two, which will prevent a return to the high multiples seen in 2020-2023.

In an uncertain market with heightened risk premiums, companies considering stock splits may need to weigh the potential benefits against the backdrop of overall market sentiment. The ongoing economic uncertainty and changes in consumer behavior might impact how companies approach decisions about stock splits, especially if they are concerned about maintaining investor confidence in a volatile market. With that being said, we’re here with a list of the 12 stocks to buy that may be splitting soon.

Methodology

We sifted through ETFs, online rankings, and internet lists to compile a list of the top stocks that were trading over $400 as of March 17. We then selected the 20 stocks with high surges in their share prices in the past 5 years and a history of stock splits. From that, we picked the top 12 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

Netflix, Inc. (NASDAQ:NFLX)

Share Price as of March 17: $918.00

Surge in Share Price in 5 Years: 175.82%

Stock Split Confirmed: No

Number of Hedge Fund Holders: 144

Netflix, Inc. (NASDAQ:NFLX) is a global entertainment streaming service. It operates in about 190 countries and offers a diverse library of TV series, documentaries, feature films, and games. These are accessible across various internet-connected devices.

The company’s subscriber growth is its primary revenue driver. It added 19 million subscribers in Q4 2024. This growth was from big events, as well as from a range of content across all regions. The majority of new subscribers came from the company’s diverse content library, not single titles. It focuses on original series, films, live sports, and games. Live sports, like NFL games, drew 30-31 million viewers, and WWE Raw had 5 million views in its first week. It’s also expanding into games, with titles like “Squid Game: Unleashed” becoming top downloads.

Netflix, Inc. (NASDAQ:NFLX) offers ad-supported plans, which now account for over 55% of sign-ups in ad-supported regions. Ad revenue is growing and is expected to double this year again after doubling last year. The company is investing in ad tech and games to boost growth. Game downloads have increased, and the company sees positive effects on acquisition and retention, though currently small. The aim is to keep growing with a focus on diverse content and new revenue streams.

The company’s strong earnings, subscriber growth driven by new initiatives, and optimistic future projections position it for continued success. RiverPark Large Growth Fund stated the following regarding Netflix, Inc. (NASDAQ:NFLX) in its Q4 2024 investor letter:

“Netflix, Inc. (NASDAQ:NFLX): NFLX was a top contributor in the fourth quarter powered by a 3Q earnings report that included stronger-than-expected revenue and operating income, solid subscriber additions, and positive forward commentary. Anti-password sharing and ad tier initiatives continue to drive subscriber growth while improving revenue per user trends, from recent price increases, drive margin expansion. The company was optimistic about future revenue growth, margin expansion, free cash flow generation and future return of capital programs.

The recent re-acceleration of subscriber growth, plus price increases on premium memberships and a stabilization of content investments, should position the company for low double digit annual revenue growth over the next few years while driving operating margin to more than 25%. We also believe that the stabilization of content spend should allow the company to continue to scale its free cash flow.”

Overall, NFLX ranks 1st on our list of the stocks that may be splitting soon. While we acknowledge the growth potential of NFLX as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NFLX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.