3 Stock Splits to Watch after Netflix - Stocks in the News

On Tuesday, video streaming giant Netflix (NFLX) announced it would execute a 7:1 stock split. With share prices climbing towards $700, NFLX is one of the higher priced companies on the market, and the split will help increase the stock’s marketability and liquidity.

Indeed, this is the general purpose of any stock split. By splitting the stock, more shares are on the market at a lower cost per share. While this doesn’t actually change the value of the stock, it can help make shares more marketable to smaller investors. If smaller investors become more interested, demand goes up, which could hypothetically lead to an increase in share prices.

It is this potential growth that leads most companies to split their stocks. One only needs to look at Netflix’s prices since the announcement, detailed by this Zacks Report, to see how the market can respond to good split news. That said, not every split leads to growth, and many are an attempt by a company’s executives to artificially manipulate share prices. Regardless, smart investors should stay aware of stock splits, as this type of news is sure to be important.

Netflix’s split is set to take effect on July 14, and below we’ve highlighted a few more stocks that will be splitting in the coming weeks.

1. Carolina Financial Corporation (CARO)
Carolina Financial is a regional bank based in Charleston, South Carolina and operating mostly in the southeastern United States. The company functions as both a local bank and mortgage company, and is also the parent company of CresCom Bank. On Monday, Carolina Financial announced that they would perform a 6:5 stock split, effective August 1.
 
CARO is currently trading around $17 a share and has a Zacks Rank #3 (Hold). While the company hasn’t seen positive earnings estimate revisions, it could still be a considered a good pick for value investors, holding a Forward P/E of $11.63 and a Style Score grade of “B” for value. With this already existing value, it will be interesting to see if smaller investors gain more interest in CARO after the split.
 
2. Tsingtao Brewery Company (TSGTY)
Tsingtao is the second largest brewing company in China, with a domestic market share of about 15%. The company is also engaged in prepackaged foods, tea, and even car rental services. Earlier this month, Tsingtao announced that they would be splitting stocks with 2:1 ratio, effective July 1.
 
With a Zacks Rank #2 (Buy), trends are suggesting that Tsingtao could be on the rise. Currently trading around $63 a share, the split cut prices in half while doubling the amount of available shares. The company’s decision to split stocks could increase its trading volume, as their average volume sits at a very low 850 right now.
 
3. Energy Transfer Equity (ETE)
Energy Transfer Equity is a diverse energy company, known for its extensive network of natural gas pipelines and storage facilities in Louisiana and Texas. ETE announced a 2:1 split back in May, and it will officially go into effect on June 27.
 
ETE currently holds a Zacks Rank #5 (Strong Sell). Earnings estimate revisions have not been showing good signs for the company going forward. Additionally, ETE has struggled to meet earnings estimates in the past, missing the Q1 mark by nearly 25%. Perhaps the company is trying to pump interest back into their slumping stocks.
 
Bottom Line
Savvy investors need to stay tuned in to all the moves companies make, as the market so often responds to these moves. Although stock splits don’t technically change a stock’s value on paper, investors should realize that a company’s decision to split their stock is normally calculated and for a purpose. By staying up to date with upcoming splits, investors can work to capitalize on those that show signs of positive growth.

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CAROLINA FIN CP (CARO): Free Stock Analysis Report
 
TSINGTAO BREWRY (TSGTY): Free Stock Analysis Report
 
ENERGY TRAN EQT (ETE): Free Stock Analysis Report
 
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