History Says the Nasdaq Will Surge in 2026. 1 Potential Stock-Split Stock to Buy Before It Does.

Netflix reported robust Q2 financial results, with revenue climbing 16% to $11 billion and diluted EPS increasing 47% to $7.19, surpassing expectations due to subscription price hikes, subscriber growth, and rising ad revenue. The company projects continued strong performance with Q3 revenue guidance of $11.5 billion (+17%) and EPS growth of 27%, driven by successful original content, expanding live events, and significant adoption of its advertising tier, which attracts 55% of new subscribers. Given its current stock price of $1,191 and a history of prior splits, a stock split is increasingly anticipated, a move that historically correlates with an average 25% return in the year following the announcement, signaling potential for further shareholder value despite its current valuation.

Analysis

Netflix demonstrated robust financial performance in Q2, reporting revenue of $11 billion, a 16% year-over-year increase, and diluted EPS of $7.19, up 47%, both exceeding expectations. This strong growth was driven by successful subscription price hikes, consistent subscriber expansion, and a notable increase in advertising revenue, which also contributed to enhanced profitability through higher sales and lower expenses. Management's Q3 guidance projects continued momentum, with revenue expected to reach $11.5 billion (+17%) and EPS to increase by approximately 27%.

The company's growth trajectory is further supported by its strategic content investments and diversification into new revenue streams. Successful original content, including "Squid Games 3" and the record-breaking second season of "Wednesday," alongside high-profile live sporting events like the Katie Taylor vs. Amanda Serrano boxing match and upcoming NFL games, are significantly boosting engagement. The advertising tier is emerging as a key growth driver, attracting 55% of new subscribers where offered and showing a 30% quarter-over-quarter increase in users for the Standard with Ads tier.

With its current stock price at $1,191 and a history of previous splits in 2004 and 2015, Netflix is a strong candidate for another stock split, despite no official announcement. Historical analysis by Bank of America indicates that companies undertaking stock splits have, on average, returned 25% in the year following the announcement, significantly outperforming the S&P 500's 12% average. This suggests a potential catalyst for further shareholder value, even as the company trades at 37 times expected 2026 earnings, a valuation considered fair given its consistent ability to identify and capitalize on new growth avenues.

Key Decisions for Investors

• Monitor Netflix's execution and monetization strategies for its advertising tier and live sports content, as these represent critical drivers for sustained future revenue and subscriber growth.
• Evaluate the potential for a stock split and its historical correlation with post-announcement stock performance, considering its impact on market sentiment and accessibility for retail investors.
• Assess Netflix's current valuation of 37x expected 2026 earnings in light of its proven capacity for innovation and market outperformance, weighing its growth prospects against current price multiples.