Los Angeles - Netflix declared a 7-for-1 stock split, rewarding shareholders after its stock doubled this year to lead the Standard & Poor’s 500 Index.
The split takes effect on July 14 and is payable to stockholders of record as of July 2, the Los Gatos, California-based company said on Tuesday in a statement after markets closed.
Netflix, owner of the world’s biggest subscription online video service, telegraphed the move earlier this year, asking investors to boost the number of authorised shares to about 5 billion from 170 million. They did so at the annual meeting this month. Chief Executive Officer Reed Hastings said at the time a lower price would make the stock more accessible.
“For a stock with consumer awareness as high as Netflix, the split makes sense,” said Paul Sweeney, an analyst with Bloomberg Intelligence. “Retail investors will likely find the split-adjusted price more palatable.”
The company’s market capitalisation has soared eightfold to more than $40 billion since 2012 as Netflix expanded its pioneering Web-based TV service to more than 50 countries and signed up more than 62 million subscribers worldwide.
The company has evolved from being solely a buyer of shows and movies to become one of the active producers of TV, documentaries and films, with a long-term budget that approaches $10-billion, according to filings.
Netflix rose as much as 3.2 percent to $702.80 in extended trading after the announcement. The stock gained 0.9 percent to $681.19 at the close of regular trading in New York.
As consumers spend more time watching video over the internet, a number of large media companies have attempted to replicate Netflix’s success with their own online-only services. Others have begun selling programming to Hulu and Amazon.com to help build up some competitors.
The post-split shares will begin trading on July 15, Netflix said. The company said previously that it didn’t plan to issue shares for mergers or to raise money.
Other higher-priced stocks have split this year, led by Apple’s 7-for-1 move, which took effect this month. Visa split 4-for-1 in March.
Bloomberg