The Surge in Meta Stock 450% May Lead to Stock Split: Given the rising value of its stock and the growing number of companies conducting stock splits this year,
speculations are increasing about the possibility of Meta Platforms splitting its shares into multiple units.
Although Meta is the only company among the “Big Seven” that has never split its shares, its current stock price makes it a strong candidate for this process.
Content
Meta and its Stock Price
Benefits of Stock Splits
Nvidia as an Example
Tech Giants
Potential Candidates for Stock Splits
Effects of Stock Splits
Meta and its Stock Price
Ken Mahoney, president of Mahoney Asset Management, pointed out that the $500 stock price is a key level for investors,
saying, “Trading at $500 per share makes Meta highly poised for a split.”
Last year, Meta’s stock benefited from increasing interest in artificial intelligence, stock buybacks, and dividend distributions.
However, Meta’s shares fell by up to 0.7% in early trading on Tuesday.
Benefits of Stock Splits
Stock splits do not affect the company’s core fundamentals, but they reduce each share’s price,
making it more attractive to small individual investors and employees.
This can increase the chances of major tech companies’ stocks being included in the Dow Jones Industrial Average,
which calculates the weight of companies based on their prices. Currently, no stock traded within the index exceeds $500.
Nvidia as an Example
The practice of stock splitting returned to the spotlight after Nvidia’s shares began trading on a split-adjusted basis.
Nvidia announced a ten-for-one split last May, and the stock price has increased by 28% since then.
Nvidia is the sixth company in the S&P Index to announce a stock split this year, compared to four companies in 2023.
Tech Giants
Analysts at Bank of America believe this indicates further moves ahead in the tech sector.
Nvidia is the fourth company among the “Big Seven” to split its shares since 2022,
alongside Alphabet, Amazon.com, and Tesla, while Apple split its shares in 2020.
Potential Candidates for Stock Splits
Bank of America recently identified a group of potential candidates for stock splits,
including tech companies such as Broadcom, Lam Research, Super Micro Computer, KLA, and Netflix.
Although Microsoft is not close to a $500 stock price,
it may be eligible for a stock split now, as it has not split its shares for over two decades.
Effects of Stock Splits
According to Bank of America, stock splits do not guarantee superior performance,
as 30% of companies that split their shares achieved negative returns after 12 months.
Analysis by Trivariate Research showed that major companies that split their shares
recorded mixed results in the year following the split,
such as Tesla’s declines after its latest split and Nike’s after its 2015 split.
The Surge in Meta Stock 450% May Lead to Stock Split