Ready for a Netflix 10-for-1 Stock Splurge?

Introduction

A stock split sounds like magic — one share suddenly becomes ten, the price drops, and the stock feels instantly “cheaper.” It grabs headlines, excites employees, and pulls in retail investors who’ve been waiting on the sidelines.

But here’s the truth: a split doesn’t make the company more valuable. It simply reflects how powerful the business has already become.

So don’t ask, “Should I buy before the split?”
Ask, “What kind of momentum is this company riding — and is that strength just beginning?”

Stock Splits: Understand Their Hidden Story

A stock split doesn’t make your investment worth more — it just reshuffles the numbers.
Think of it like trading a S$100 note for ten S$10 bills: nothing has changed in value, only in appearance.

But the real headline is this: Netflix’s share price has surged so high, for so long, that it had to split. That kind of momentum doesn’t happen by accident. It’s a sign of a business executing with power, confidence, and growth that’s getting harder for investors to ignore.

1. Unlock the Mystery Behind the Spike

When Netflix released its 3rd quarter 2025 (3Q’25) results, headlines jumped on an “earnings miss.” But the reality behind the numbers tells a very different story.

1.1 The Charge - A One-Off Hit, Not a Trend

Netflix booked a US$619 million tax charge after an unfavourable Brazilian Supreme Court ruling. This pushed operating margins down from 31.5% to 28% for the quarter — but the impact is purely temporary.

1.2 The Context - Spanning 4 Years, Not One Quarter

The charge doesn’t reflect a sudden deterioration in Netflix’s business. It covers nearly 4 years of cumulative exposure, from 2022 through Q3’25. Only about 20% of the total amount roughly US$124 million actually relates to 2025.

1.3 The Reality - The Business Remains Strong

Management described the charge as a routine “cost of doing business.” And the financials support that view. Free cash flow for the first nine months of 2025 surged 37% year on year to US$7.6 billion, with full-year FCF on track to reach around US$9 billion.

2. Content Strength: Hits That Become Franchises

Content has always been Netflix’s edge — and the company is getting even better at transforming successful shows and films into long-lived franchises.

2.1 Market Share Keeps Rising

Since late 2022, Netflix’s share of TV viewing has grown 15% in the US and 22% in the UK, underscoring the platform’s ability to capture attention in increasingly crowded markets.

Breakout hits like Wednesday Season 2 (114 million views) and Happy Gilmore 2 (126 million views) show that Netflix’s creative engine is firing on all cylinders, delivering global titles that anchor engagement.

2.2 Monetising the Hits Beyond Streaming

Netflix isn’t just creating content — it’s building worlds.
The animated blockbuster KPop Demon Hunters (325 million views) became the platform’s most-watched film ever, and Netflix is now leveraging that popularity far beyond the screen.

Through licensing deals with Mattel and Hasbro, apparel collaborations, and experiential events, Netflix is turning its titles into scalable franchises. This strategy deepens fan engagement, opens new revenue streams, and reduces reliance on constantly generating brand-new hits.

3. Netflix’s Next Growth Engines - Advertising and AI

3.1 Advertising Momentum: Small Today, Powerful Tomorrow

Netflix’s ad-supported tier is still in its early stages, but momentum is clear. In 3Q’25, US upfront ad commitments more than doubled, and total advertising revenue is on track to more than double in 2025.

As the ad infrastructure matures, Netflix will be able to:

• Convert more non-paying users into paying ad-tier subscribers

• Attract premium global advertisers

• Increase targeting precision and pricing power

• Build a high-margin, recurring revenue stream.

Advertising is shaping up to be a long-term growth tailwind that complements the subscription business.

3.2 AI for Efficiency and Margin Expansion

Netflix is also leveraging generative AI to improve productivity and reduce costs. In Happy Gilmore 2, AI was used to de-age actors, saving both time and production costs.

The company is now testing AI in areas like:

• Content discovery and personalisation

• Ad optimisation

• Production workflows and visual effects

• Script and pre-visualisation tools.

While not an immediate earnings driver, AI could significantly improve margins and boost content production efficiency over the coming years.

3.3 The Big Picture

The temporary tax charge is just noise. What matters is Netflix’s strengthening fundamentals:

• Rising market share and a growing content library

• Hits that become monetisable franchises

• New revenue streams from advertising

• Margin-enhancing efficiency from AI.

Netflix is executing on multiple fronts, building both scale and sustainability. For long-term investors, the story isn’t the headline earnings miss, it’s the business momentum and structural growth that continue to position the company for the next phase of expansion.

4. Investor Takeaways
Don’t get distracted by temporary noise. Netflix is stronger than ever, turning hits into lasting franchises, expanding its ad business, and harnessing AI to boost efficiency. The fundamentals are solid, growth is accelerating, and the company is building multiple levers for long-term value. For investors willing to look past headlines, Netflix’s story is far from over, it’s just entering its next, potentially most profitable chapter.

Happy Investing!!