4 days ago
5
Rocky White
Wed, November 12, 2025 astatine 7:00 AM CST 4 min read
Netflix Inc (NASDAQ:NFLX) recently announced a 10-for-1 banal split, with trading connected a split-adjusted ground acceptable to statesman adjacent week. Most investors recognize a banal divided doesn’t alteration a company’s cardinal value, since the stock terms adjusts proportionally, but it volition marque the banal (and its options) much accessible to retail traders.
This is particularly existent for NFLX, which is trading supra $1,000 per share. Will the little terms thrust the banal higher? This week, I’m examining the humanities information to spot however stocks person performed pursuing splits. I’ll instrumentality a person look astatine high-priced, large-cap stocks similar NFLX to spot if they thin to behave immoderate differently.
Using a database of existent optionable stocks going backmost to 2010, I person information connected astir 310 banal splits. The array beneath summarizes however stocks performed pursuing those splits. The 2nd array is for examination and shows the returns of buying the S&P 500 Index (SPX) alternatively of those stocks.
Stocks somewhat underperformed successful the precise abbreviated word aft a split. The two-week instrumentality for a banal aft its divided averaged 0.48%, which was little than the mean instrumentality of buying the SPX (0.60%). The mean for longer-term returns is hardly supra the corresponding SPX returns, but lone fractional the stocks bushed the index, and that somewhat higher mean instrumentality comes with a batch much volatility (based connected the mean affirmative and mean antagonistic returns).
Netflix banal is getting importantly much affordable. I wondered whether a melodramatic terms driblet mightiness marque shares a batch much enticing for investors and pb to amended post-split returns. To trial this, I looked astatine returns for stocks that were priced supra $400 earlier the split. The array beneath shows the results.
There were 32 stocks successful my database successful which the banal was priced supra $400 earlier it split. I was a small amazed to find these stocks underperformed successful the abbreviated term, particularly successful the archetypal 2 weeks. After the split, these stocks declined 1.2% connected mean implicit the archetypal 2 weeks, with conscionable 38% of them beating the SPX. The underperformance lasts for astir a month, but past the longer-term returns (six months and 1 year) bushed the broader marketplace connected average.
Buying these high-priced stocks conscionable aft a divided would has yielded an mean instrumentality of 17.4% implicit the adjacent year, compared to 9.8% for the SPX. These stocks mean precocious returns contempt lone 50% of them being positive, and conscionable 43% beating the wide marketplace implicit the adjacent year. That mean was skewed by immoderate outlier returns, though. For example, Strategy (MSTR) divided successful August 2024 and astir tripled implicit the adjacent 12 months.
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