Shares rose 3.7% in early trading to an all-time high of $706.24. The stock split announced last night is designed to make the shares more affordable for average investors. By giving holders six additional shares for each one that they own, they’ll lose nothing while the price of the stock drops from around $700 to around $100.
But the rally cooled after billionaire investor Carl Ichan said in a tweet that he’s through: “Sold last of our [Netflix] today. Believe [Apple] currently represents same opportunity we stated [Netflix] offered several years ago.” He began to buy Netflix shares in 2012, when the prices was below $60, but has been selling since late 2013.
The tweet seemed to chill the Netflix rally. The stock is now trading for about $690, up just 1.5% from the closing price yesterday before the announcement of the split.
Everyone is wondering how much farther Netflix can go. It has been the market’s fastest growing stock. Shares appreciated 105% since the beginning of 2015 as investors marveled at the continuing growth in domestic subscriptions and ambitious expansion plans abroad. But they’re up to an astronomical 182 times its earnings. Major media companies range from Disney’s 24.6x to Fox’s 7.8x. Netflix has a market value of $42.2 billion, ahead of Yahoo ($38.2 billion), Sony ($35.6 billion), Dish Network ($32.4 billion), and CBS ($28.4 billion).
Some Wall Streeters say that the company is still on a tear. BTIG’s Richard Greenfield this week raised his one-year price target to $950 (pre-split).
Netflix “is winning the daily war for consumer time and attention,” the analyst says. “Just a few years ago, the ‘knock’ on Netflix was there was not enough to stream/watch. Now consumers are building up personal “bucket” lists of series they want to see on Netflix – new and library content is coming on faster than it can be consumed/watched.”