There have been many known and expected stock splits in 2024. Popular restaurant operator. Chipotle Mexican Grill Inc. New York Stock Exchange: CMG The stock was trading at an astronomical price of $3,400 per share before it did its first ever 50-to-1 stock split on June 25, 2024. This opened the door to numerous new investors who couldn’t afford shares of their favorite fast food restaurant. . Leader in artificial intelligence (AI) chips NVIDIA Company NASDAQ: NVDA On June 7, 2024, it conducted a 10-to-1 stock split, allowing small investors to directly benefit from the artificial intelligence boom. Manufacturer of custom artificial intelligence accelerator chips Broadcom Inc. NASDAQ: AVGO On July 15, 2024, it carried out a stock split at a ratio of 10 to 1.
While companies do stock splits for a number of reasons, it is usually done to make their shares available to a wider audience of investors, thereby improving sentiment. When a stock trades above $1,000, it severely limits the type and number of shareholders it can attract. Small investors are denied the opportunity to share in the success of these beloved companies. The announcement of a stock split often causes the underlying stock to rise in anticipation of more investors taking positions. This also increases the liquidity of shares. When stocks rise above $1,000 per share, bid-ask spreads can reach several points, resulting in significant slippage. Stock splits provide tighter price spreads, resulting in less slippage when trade orders are executed.
Once a stock split occurs, the stock may continue to rise, thereby compounding the underlying return for holders prior to the split, as is the case with a stock split. consumer discretionary sector giant Walmart Inc. New York Stock Exchange: WMT. The country’s largest importer and the world’s largest employer announced a 3-for-1 stock split on February 26, 2024, resulting in a stock price of approximately $58.18 on February 26, 2024. The stock has since risen to $85.79 as of November 13, 2024. This was the 10th time for Walmart. stock splitting. An investor who bought just one share of Walmart stock in 1975 would have 1,536 shares today as a result of the stock split.
If we look ahead to 2025, similar trends could reverse as some high-yield stocks continue their upward momentum. Here are three stocks whose significant growth makes them prime candidates for stock splits, offering new and existing investors opportunities to benefit from increased availability and liquidity.
1. Netflix: Dominance in Video Streaming
Netflix today
(As of 11/19/2024 ET)
- 52 week range
- $445.73
▼
$874.49
- P/E ratio
- 49.31
- Target price
- $753.45
Netflix Inc. NASDAQ: NFLX revolutionized video streaming. The company originally launched in 1997 as a DVD-by-mail delivery service. By 1999, they adopted a subscription model allowing customers to rent an unlimited number of DVDs by mail for a flat fee and no late fees, which was instrumental in putting Blockbuster Video out of business. By 2007, Netflix introduced streaming services to its customers, allowing them to watch a limited library of movies over the Internet. Buffering times and slow internet speeds made it difficult to watch videos at first, but as internet speeds increased, video streaming became a popular trend.
Netflix did its first stock split (2-for-1) in 2004 when its shares reached $72, and its second split (7-for-1) in 2015 when its shares reached a high of $700. The company continued to grow its market share and became the world’s most dominant video streaming service, with more than 282.7 million paid subscribers added by downgrading to lower-cost ad-supported subscriptions. Netflix shares are trading up 69% year to date (YTD), recently hitting an all-time high of $841 on November 14, 2024. Netflix could pursue a third stock split in 2025 if shares remain elevated or even exceed levels. price level of 1000 dollars.
2. ASML Holding: dominance in the EUV market
ASML today
(As of 11/19/2024 ET)
- 52 week range
- $648.00
▼
US$1110.09
- Dividend yield
- 0.84%
- P/E ratio
- 34.67
- Target price
- $970.60
When semiconductor companies need to produce advanced computer chips on smaller nodes, they need special photolithography machines to print microscopic patterns of circuits onto a silicon wafer. based in the Netherlands ASML Holding N.A. NASDAQ: ASML has a near monopoly in extreme ultraviolet (EUV) photolithography. Their systems are used by large semiconductor manufacturers such as Taiwan Semiconductor Manufacturing Company New York Stock Exchange: TSM produce artificial intelligence chips for NVIDIA and Advanced Micro Devices Inc. NASDAQ: AMD.
ASML has had five stock splits in the past, two of which were unconventional. ASML conducted a 2-for-1 stock split in May 1997 and another in May 1998. Then, in April 2000, the company completed a 3-for-1 stock split. ASML completed an 8-for-9 reverse stock split in October 2007 and a 77-for-100 reverse stock split with a cash component in November 2012. The stock rose from $56 to a peak of $1,110.09 in July 2024, but is down 40% since then, down to $658.63 as of November 15, 2024.
ASML noted that in addition to artificial intelligence, the semiconductor industry is still trying to normalize its activities. The return of the Trump administration and the potential impact on its China business could influence whether ASML decides to pursue another stock split. Time will show.
3. ServiceNow: Cloud Dominance and AI-Powered Digital Transformation
ServiceNowToday
(As of 11/19/2024 ET)
- 52 week range
- $637.99
▼
$1061.66
- P/E ratio
- 158.97
- Target price
- $986.39
Leading provider of cloud platforms for digital workflows ServiceNov Inc. New York Stock Exchange: NOW The company’s shares rose more than 3,000% from an IPO price of $18 on June 29, 2012 to an all-time high of $1,061.66 on November 13, 2024. The company has followed the cloud computing trend from the very beginning and continues to do so. at the forefront of digital transformation. ServiceNow recently released its AI Agents, which are customizable autonomous AI programs designed to perform tasks to achieve specific goals. ServiceNow shares are trading up 43% year to date, and the company has never conducted or announced an intention to conduct a stock split, leaving investors wondering when (or if) the first split will occur.
As the stock continues to rise, there may be more pressure on the enterprise platform-as-a-service (PaaS) provider to consider a stock split. ServiceNow continues to grow, as evidenced by earnings per share of 27 cents and revenue growth of 22.2% YoY to $2.75 billion in the third quarter of 2024.
You might want to hear this before you consider Netflix.
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