Will Costco and Netflix Spark the Next Stock Split Wave? Why the Market's Highest-Priced Stocks May Disappoint

Stock splits have become Wall Street’s unexpected darling. Alongside the artificial intelligence boom that began in late 2022, equity splits represent one of the most powerful forces propelling major market indexes toward new all-time highs. What’s driving this obsession? The answer lies in both psychology and mathematics.

A stock split is fundamentally a cosmetic restructuring—a company divides its shares into smaller pieces without changing its total market capitalization or operational performance. When a company executes a forward split (lowering the per-share price), investors often rush in. Historical data from Bank of America Global Research reveals the appeal: companies that completed forward splits between 1980 and 2025 averaged a 25.4% return in the 12 months following their announcement, compared to just 11.9% for the S&P 500 over the same period.

Now, with Costco trading near $1,000 per share and Netflix hovering around $1,300, speculation has mounted about whether these household names will become 2025’s blockbuster stock split stories. However, beneath the attractive headlines lies a more nuanced reality.

Understanding Why Stock Splits Still Drive Wall Street Euphoria

The appeal of forward splits runs deeper than mere nostalgia. Investors fundamentally prefer companies announcing traditional splits over those conducting reverse splits (used by distressed companies trying to avoid delisting). Companies splitting their stock forward typically signal financial strength and market dominance. These are businesses innovating faster than peers and firing on all operational cylinders.

The psychology matters too. When a $500 stock splits into two $250 shares, the nominal affordability improves—at least symbolically. For decades, this accessibility genuinely mattered because retail investors lacked the ability to purchase fractional shares through standard brokerage platforms.

Costco’s Changing Calculus: Why Management Isn’t Rushing to Split Stock

Costco makes an intriguing candidate on the surface. The warehouse giant hasn’t executed a stock split since January 2000—a full 25 years ago. At its current price point, the logic appears sound.

Yet during Costco’s fiscal first-quarter conference call in December 2024, Chief Financial Officer Gary Millerchip essentially closed the door on near-term action. When asked about stock split possibilities, he acknowledged the company’s historical practice but explained why circumstances have shifted: “The economic arguments that were true in the past are a little bit less clear because retail investors and employees both have the ability now to buy fractional shares.”

This statement captures a seismic shift in market infrastructure. Modern brokerage platforms now routinely permit fractional-share purchases, eliminating the primary reason companies historically rushed to split stock. Costco’s board believes this technological evolution has diminished the urgency. Unless management detects evidence that everyday investors or employees are being priced out, a split remains unlikely. The company will continue evaluating the matter, but no concrete plans exist.

Netflix’s Institutional Investor Problem and the Retail Ownership Dilemma

Netflix faces a different constraint—one that has nothing to do with technology and everything to do with shareholder composition. While Costco grapples with declining necessity, Netflix contends with a structural challenge: institutional investors dominate its cap table.

As of mid-2025, institutional entities—including hedge funds, custodial banks, and passive index funds—controlled approximately 80.2% of Netflix’s outstanding shares. Retail investors accounted for just 19.8%. This matters profoundly because retail investors are typically the driving force behind corporate decisions to split stock. Institutional managers overseeing millions, billions, or trillions of dollars simply don’t require lower nominal share prices to execute their investment theses.

That said, Netflix’s 19.8% retail ownership isn’t negligible compared to other expensive stocks. AutoZone, FICO, and Booking Holdings each feature retail ownership closer to 10-11%, creating virtually no board incentive to act. Netflix’s situation remains slightly more favorable from a potential split catalyst perspective, though even here, urgency appears limited.

The Broader Market Shift: When Affordability Becomes Irrelevant

The current environment reveals something fundamental about how stock markets have evolved. Three companies already announced splits in 2025, capturing investor enthusiasm. Yet the universe of ultra-premium-priced stocks has become quieter about this maneuver than headlines suggest.

The reason traces back to infrastructure. When fractional shares became mainstream, they fundamentally altered the economic case for splitting. A $1,500 stock with fractional-share capability creates no meaningful friction for retail participation. The “affordability” argument loses its power.

Costco’s leadership understands this fully. Netflix’s board likely understands it too. Both companies recognize that announcing a stock split in 2026 would be satisfying the market’s appetite for nostalgia rather than addressing genuine business needs.

The Bottom Line: Premium-Priced Stocks No Longer Face Urgent Pressure

The market should expect caution from the most expensive stocks when it comes to stock splits. While the phenomenon remains a powerful equity market catalyst—particularly for smaller-cap companies and stocks genuinely constrained by accessibility—Costco and Netflix don’t fit that profile. They represent different obstacles: one has technological solutions already in place; the other lacks sufficient retail demand to justify board action.

For investors hunting the next stock split winners, look beyond the nominal price tag. The real story isn’t about which stocks are most expensive—it’s about which companies genuinely perceive a business case for change.