![]() ![]() The 15 Best Stocks to Buy for the Rest of 2022 That's because the blue-chip barometer isn't built like the other two major indexes. Amazon to the Dow?īut perhaps the most interesting perceived benefit of the split is that Amazon could be tapped for the 30-stock Dow Jones Industrial Average one day. The company bought back $2.12 billion of its shares under that plan.īy reducing its share count, Amazon's remaining shares will have greater perceived value by dint of both their increased scarcity and greater claims on future cash flows. It replaces Amazon's previous $5 billion stock repurchase authorized in 2016. However, a $10 billion share repurchase program, also announced back in March, is another matter entirely. ![]() ![]() In this case, shareholders will effectively be swapping a $20 bill in return for 20 $1 bills. That's because a split is essentially the same thing as making change. And that continues to be true even in an age when brokers are happy to sell clients fractional shares for free.Īfter all, splits might give traders and investors more flexibility, but they have absolutely zero impact on a company's fundamentals, prospects or its shares' valuation. Aol and Borders are used as examples, which now seem rather appropriate as Netflix’s stock crashes through charts much as those two companies’ did."This split would give our employees more flexibility in how they manage their equity in Amazon and make the share price more accessible for people looking to invest in the company," an Amazon spokesperson said.ĭespite what the textbooks say, the market loves stock splits. ![]() He stated that his recent moves were to prevent his company from moving before its too late. Netflix’s slide from grace is exactly what Reed Hasting said he was trying to avoid. Reed Hastings Sunday night blog post stated in part that while the now two companies are done with price increases, the decision to completely separate DVD and streaming will help both businesses by letting “each grow and operate independently.” Qwikster was then announced, which will continue the task of servicing and mailing DVDs - and now games, too. These shifts come as the company announced late last week that it lowered its Q3 subscriber projection by a million subs spanning both the streaming and DVD rental business. Last Friday, Caris & Company even downgraded shares of Netflix from above average to simply average. Barclays now labels the Netflix stock as overweight and repriced their target from $285 to $260. A media snarkfest ensued while the stock price continued its nose dive.īoth Goldman Sachs and Barclays Capital recently lowered their price targets on shares of Netflix, with the former pricing the stock’s 6-month, DCF-derived target price at $270, down from $330. Then late Sunday night Netflix took it even farther and announced that an entirely new company, Qwikster, would handle the DVD mailers while Netfix would do just streaming. Most should know the storyline by now: Netflix split the company into two separate divisions two months ago and raised the price of a popular subscription. Sure, it’s still the top consumer of internet bandwidth and the de facto leader in video streaming services, but the company’s stock has lost a year of growth in a matter of two months, or rather, two decisions. On July 12, 2011, just one day prior to Netflix’s all-time high price of 304.79, the company announced a radically different corporate structure and also raised the price of the most popular subscription plan by 60%. Over the past two months the company watched subscribers leave along with 55% of its market cap from the same time period - which now places their valuation at its 52 week low of $7.46B. And with the sound of Wall Street’s opening bell, Netflix quickly dipped below its 52 week low, opening at $141.40 but falling within a few seconds under $140. ![]()
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