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An increase in the number of companies enacting stock splits this year has Wall Street speculating on who might be next, with some analysts pointing to Meta Platforms Inc. Meta is the only stock in the "Magnificent Seven" that hasn't ever split shares. Although the stock is off its all-time highs from April, it has surged over 450% from its 2022 low. Trading at over $500 a share, Meta looks ripe for a split. The stock has benefited from interest in AI, buybacks, and the introduction of a dividend in the past year. Meta shares slipped as much as 0.7% in early trading on Tuesday.
- While splitting shares doesn’t change a company's fundamentals, it does lower the price per share, potentially making the stock more appealing to smaller retail investors and employees. This move could also make top technology stocks more viable candidates for inclusion in the price-weighted Dow Jones Industrial Average. The renewed focus on stock splits follows Nvidia Corp.'s recent 10-for-1 split announcement, which saw the stock rise 28%. Analysts at Bank of America see this as a sign of more splits to come in the technology sector, with companies like Broadcom Inc., Lam Research Corp., and Netflix Inc. identified as potential candidates.
Why it matters
It is worth noting that splitting shares doesn’t guarantee outperformance, as evidenced by mixed results for companies like Tesla and Nike following their splits.
