Shares of Netflix Inc. (NASDAQ:NFLX) rallied more than 2 percent Tuesday in extended-hours trading after the video-streaming service announced it has approved a seven-for-one stock split. Netflix, which has a market value of $41 billion, is currently the best performer this year in the Nasdaq 100, an index that tracks the largest non-financial Nasdaq companies. The stock has soared 100 percent since January.
Netflix stock touched an all-time high of $692.79 on June 10.
The stock split will come in the form of a dividend of six additional shares for each outstanding share. The dividend is payable on July 14, with trading at the post-split price on July 15, the company said in a statement. Any shares purchased between the July 2 record date and the July 14 payment date will come with a "due-bill" entitling the buyer to six additional shares for each share purchased.
The movie streaming service topped 62 million subscribers globally during the January-March quarter, as original shows such as "House of Cards" drew new viewers worldwide. A year ago, the service had 48 million subscribers. The company attributes recent strong U.S. growth to its original content, including the launch of the third season of "House of Cards" and new shows "Unbreakable Kimmy Schmidt" and "Bloodline."
Netflix’s subscriber base continued to grow last quarter, topping the 60 million mark for the first time. The company added 2.28 million U.S. subscribers and 2.60 million international subscribers for a total of 4.88 million, topping the company’s forecasts for a gain of 4 million subscribers in the quarter, bringing its total streaming subscriber base to 62.27 million.
Bank of America Merrill Lynch boosted its 12-month rating on the video-streaming service’s stock to Buy from Underperform last month, citing long-term subscriber growth and earnings potential. The financial firm also raised its price target on Netflix, more than doubling its original target to $722 per share from $350, driven by "improved marketing and content costs from global original content licensing."
The ratings boost is a "more constructive view of Netflix long-term subscriber and earnings potential based on its rapidly growing portfolio of 'AAA' original content," Bank of America Merrill Lynch analyst Nat Schindler said in a research note on May 5.
Shares of Netflix closed Tuesday’s regular trading session up nearly 1 percent to $681.19. Following the stock split announcement, Netflix shares gained 2.6 percent in after-hours to as high as $699.56.