The soaring valuations of certain stocks have reignited speculation around potential stock splits in 2025, with Netflix (NASDAQ:NFLX) and Costco emerging as key contenders. Retail investor enthusiasm has surged alongside market activity, driving several stocks to quadruple-digit per-share prices. Companies often opt for stock splits under such conditions to improve accessibility for retail investors and enhance market liquidity. This practice can also tighten bid-ask spreads, creating a smoother trading experience for shareholders. Stocks trading near $1,000 or above are increasingly drawing attention as potential candidates for such corporate strategies.
Why might Netflix split its stock in 2025?
Netflix, currently trading near $972, has seen its stock price soar to all-time highs, prompting discussions of a potential stock split. The company has a history of executing stock splits at lower price points, including a 2-for-1 split in 2004 and a 7-for-1 split in 2015. Analysts anticipate that Netflix’s 2025 earnings-per-share (EPS) will rise by 23% to $24.38, alongside revenue growth projected between $43.5 billion and $44.5 billion. Additionally, the company reported robust subscriber growth in Q4 2024, adding 18.9 million new users, with ad-supported plans comprising 55% of new signups. However, concerns remain over its valuation, as Netflix’s forward earnings and sales multiples are relatively high, requiring sustained content success to support its growth trajectory.
Will Costco follow suit with a stock split?
Costco’s shares, now hovering around $955, are another candidate for a stock split in 2025. Analysts expect the stock to potentially breach $1,000, with price targets as high as $1,145. The company last split its stock in 2000, followed by a notable performance advantage compared to the broader market. Costco’s strong financial fundamentals include a 7.5% increase in Q1 2025 revenue to $61 billion and a 7.6% rise in paid memberships, totaling 77.4 million. Despite these positives, the company faces challenges, including ongoing union negotiations with 18,000 employees who have authorized a strike. This, coupled with a high earnings multiple of 55 times, suggests management may remain cautious before committing to a split.
Stock splits are not new to these companies, and this speculation builds on prior instances. Netflix’s 2015 split helped it attract more investors, while Costco’s 2000 split preceded significant market outperformance. Both companies have taken similar steps in response to high valuations, reinforcing the possibility of further splits in 2025. The decision often reflects market conditions, investor sentiment, and liquidity considerations, all of which remain relevant today.
As valuations climb, stock splits could serve as a strategic tool for companies to make their shares more accessible to smaller investors while maintaining performance momentum. However, investors should weigh potential risks, such as dependency on future earnings growth and market conditions, before making decisions based on split speculation. For companies like Netflix and Costco, a stock split may enhance participation and liquidity but does little to alter their actual market value or fundamentals.
