Replies to post #3491 on Netflix Inc (NFLX)

[MrPennyBags]

On July 14, each Netflix share will pay a one-time dividend consisting of six additional shares. Technically, you should hold shares at the close of July 2 in order to qualify for this event, but shares traded between those dates will automatically come with a due bill. That's an IOU that requires the seller to hand over the new split-based shares to the buyer as soon as they are created. All of this is handled by the brokers behind the scenes, so there's no way to sell your shares and hang on to the stock dividend.

Everyone who purchased after the 2nd does not qualify according to Motley Fool. I would trust that you will lose your value (divided by 7) and not get the extra shares

[MrPennyBags]

Read this to better understand
http://www.fool.com/investing/general/2015/06/24/what-does-netflix-incs-7-for-1-stock-split-really.aspx

Here is another article explaining it
http://finance.yahoo.com/news/netflix-splits-stock-7-1-203117589.html

[MrPennyBags]

http://budgeting.thenest.com/calculate-stock-splits-10078.html
Note the ex-dividend date and the date of record. To participate in the split, you must own the stock on the date of record, which means you must have bought the stock by or on the ex-dividend date. If you sell on the ex-dividend date, the person who buys your shares buys them with the additional stock. If you buy one day late, you pay a lower price, but you don't receive the stock split. In a reverse split, if you buy stock on the ex-dividend date you will pay a higher price for fewer shares, because the reverse split consolidated shares, so the price goes up.

[V63]

This info is if you buy after July 2nd
Quote:
For people who really are interested, here is what happens when a person buys between the day after the T-3 date to be holder of record, and the distribution date. (Aside: after a stock is traded on some date "T", the trade takes 3 days to settle. So to become a share holder of record on a certain date, you have to trade (i.e., buy) the shares 3 days before that date. That's what the shorthand notation "T-3" above means.) Remember that the holder of record on the record date will get the stock dividend. And of course the price doesn't get adjusted until the distribution date. So let's cover the case where a trade occurs in between these dates.

The buyer pays the pre-split price, and the trade has a "Due Bill" atttached. The due bill means the buyer is due the split shares when they are issued. Sometimes the buyer's confirmation slip will have "due bill" information on it.
In theory, on the distribution date, the split shares go to the holder of record, but that person has sold the shares to the buyer, and a due bill is attached to the sale.
So in theory, on the distribution date, the company delivers the split shares to the holder of record. But because of the due bill, the seller's broker delivers on the due bill, and delivers the seller's newly received split shares to the buyer's broker, who ultimately delivers them to the buyer.
The fingers never left the hand, the hand is quicker than the eye, and magic happens. In practice no one really sees any of this take place.
In some cases, the company may request that its stock be traded at the post-split price during this interval, or the market itself might decide to list the post-split stock for trading. In such cases, the due bills themselves are traded, and are called "when issued" or for spinoff stock, "when distributed" stock. The stock symbol in the financial columns will show this with a "-wi" or "-wd" suffix. But in most cases it isn't worthwhile to do this.