Stock splits have once again become a hot topic in the investment world, with several major companies announcing their intentions to split their shares. Nvidia, Sony, Lam Research, Chipotle, and Walmart are among the notable names making headlines with their split announcements. However, one company stands apart from the crowd: Meta Platforms, the parent company of social media giants Facebook and Instagram. Despite being a prominent player in the tech industry, Meta has never undergone a stock split, with its shares currently trading at nearly $470. This unique position has led many to speculate whether Meta might be the next high-profile company to consider a split, with the aim of making its shares more accessible to individual investors.
Chris Senyek, the chief investment strategist at Wolfe Research, shed some light on the dynamics of stock splits. He emphasized that while stock splits don’t fundamentally change a company’s value, they can enhance the appeal of its stock to retail investors and those seeking speculative opportunities. Senyek’s analysis highlighted Meta as the lone outlier among the “Magnificent Seven” tech giants, as it has never opted for a split. In contrast, companies like Apple, Amazon, Tesla, Alphabet, and Nvidia have all undergone multiple splits throughout their history.
The decision to pursue a stock split often hinges on certain price thresholds, with $500 being a notable point of consideration for many companies. Strategists at BofA Global Research have observed this trend, noting that companies often contemplate splits when their stock prices approach or surpass this level. While Meta and Microsoft, another tech heavyweight currently trading at around $420, have not publicly commented on potential splits, historical data suggests that such moves could provide further momentum to already high-performing stocks.
According to historical data analyzed by BofA strategists, stocks tend to experience significant gains in the wake of split announcements. In fact, stocks have historically achieved 25% total returns in the 12 months following a split announcement, outperforming the broader market index by a significant margin. This historical trend underscores the potential benefits of stock splits, which can fuel investor enthusiasm and drive further growth in share prices.
Given these trends, it wouldn’t be surprising to see Meta and Microsoft join the ranks of companies pursuing stock splits in the near future. As the BofA analysts aptly put it, “Big Tech is going bite-sized,” reflecting the broader trend of tech giants exploring opportunities to make their shares more accessible and appealing to a wider range of investors.