Netflix Shares Surge on Possible Stock Split
According to reports, we could see Netflix Inc. (NFLX, +4.22%) headed for a stock split. During an investors meeting on Tuesday, shareholders approved a proposal to increase the maximum number of shares outstanding. This means that we could see Netflix’s authorized shares go from the current 170 million to five billion. According to a spokesman from the company, the final results will be filled in an 8K form on Thursday with the SEC (Securities and Exchange Commission). Reed Hastings, the Chief Executive of Netflix, explained that the decision to increase the number of shares was based on authorized capital which a few Silicon Valley companies have. As a result of the move for an increase in the number of shares, talk of a possible stock split has now emerged. A stock split normally occurs when a company’s stock is out pricing other stocks of companies within the same sector or when the share price of a company is too high for investors. On Wednesday, Netflix shares were trading at around $686 a share. This puts them as the 2nd highest stock on the S&P 500 index (SPX). According to a Netflix spokesman, Hastings is currently seeking the approval of the board for the stock split yet no information about this split has been provided. Added to this, Netflix also recently announced that they have entered into a deal valued at $30 million in order to distribute the movie ‘War Machine’ featuring Brad Pitt. This movie is set to debut in 2017 and it is based on the book ‘The Operators: The Wild and Terrifying inside Story of America’s War in Afghanistan’ by Michael Hastings.
In U.S. trading on Tuesday, U.S. stocks rallied. As a result, the main indices gained back some of the losses we have seen over the last 4 days of consecutive losses and as a result, these indices were on track to post the largest gain in one day in the month of June. According to Wall Street analysts, this rally was prompted by a combination of a strong U.S. dollar (USD) which as a result boosted commodity prices while optimism regarding Greece receiving additional bailout cash from creditors was evident among investors. At the close of trading, the Dow Jones Industrial Average (DJIA) advanced 1.4%, or 250 points, to 18,016. This benchmark index turned positive for the year. Also on the upside was the Nasdaq Composite index (COMP) which gained 1.3%, or 63 points, to 5,076 while the S&P 500 index (SPX) rose 1.2%, or about 25 points, to 2,105. Gains were led by financial and technology stocks which rose more than 1.5 percent each while energy shares also rallied as a result of gains in the oil prices.
In forex trading on Wednesday, the U.S. dollar (USD) traded at a 3-week low. This came as investors continued to lock in profits from the greenback’s rally last week. Trade was quiet as a result of no economic data expected out of the U.S. The EUR/USD held steady and traded at 1.1283. The single currency rose to a high of 1.1385 during the session as a result of the continued selloff in European government bonds. Added to this, German 10-year bund yields rose to the highest levels which were last seen in September last year. In other currency news, the GBP/USD traded at 1.5519, up 0.88% while the USD/JPY traded at 122.78, down 1.27 percent. Against the New Zealand dollar and the Swiss franc, the U.S. dollar traded lower with the NZD/USD up 0.88% at 0.7193 and with USD/CHF down 0.16 percent at 0.9294. Meanwhile, the U.S. dollar index was at 94.81, down 0.37 percent.
On Thursday, crude oil prices declined in early Asian trade. Investors took profits from an overnight rally in the U.S. which was a clear indication that efforts are being made to decrease the domestic output while demand is steadily climbing. WTI crude oil for July delivery traded at $61.09 a barrel, down 0.56% on the NYMEX. Also, Brent crude oil for delivery in July traded at $65.64 a barrel on Wednesday, up 1.16%, or $0.76 on the Intercontinental Exchange (ICE). , According to the weekly report by the EIA (Energy Information Administration), crude stockpiles declined last week by 6.8 million barrels to 470.6 million barrels. This beat analyst expectations for a rise of 1.8 million barrels which was bullish for the commodity.