Wall Street is once again in anticipation for a highly-awaited stock split announcement – and this time, it's not Netflix or Costco that are under scrutiny!
In the dynamic world of finance, three prominent companies have recently joined the ranks of stock-split stocks in 2025. Meta Platforms, O'Reilly Automotive, and Fastenal are among the brands that have chosen to lower their share prices and make their stocks more accessible to retail investors.
Meta Platforms, the parent company of Facebook, Instagram, and WhatsApp, is a prime contender for becoming the highlight stock-split stock of 2025. With its share price rebounding to $700, a stock-split announcement is a possibility, as such a move would make the shares more affordable for everyday investors. The company's forward price-to-earnings ratio of 24 is considered a bargain due to its sustained growth rate in the mid-teens and historically conservative profit forecast.
O'Reilly Automotive, an auto parts supplier, completed a 15-for-1 forward split in June 2025. Similarly, Fastenal, a wholesale industrial and construction supplies company, undertook a 2-for-1 forward split in May 2025.
The decision to perform a stock split is influenced by several key factors, including company growth, share price, market conditions, and investor demand. A high share price can make stocks less accessible to retail investors, prompting companies to consider splits to lower the price and increase affordability. Rapid growth and positive outlooks may also encourage splits to attract more investors by making shares seem more affordable.
Stock splits affect companies in several ways. They can increase accessibility, attract retail investors, potentially increasing trading volume and liquidity. Lower share prices can create a perception of more growth potential, which may positively influence investor sentiment. However, it is important to note that a stock split does not change the company's underlying value or investor wealth.
Stock splits can have broader market impacts as well. Significant price changes can affect a company's weighting in stock indices. Splits can lead to short-term volatility due to speculative trading, but they also often follow periods of strong stock performance. More shares can lead to greater market liquidity, potentially boosting trading activity.
Meta Platforms is sitting on a mountain of cash, with more than $70 billion in cash, cash equivalents, and marketable securities. With over 27% of Meta's shares held by everyday investors, a split would be a logical choice to make the company's shares more accessible to its dedicated user base.
On the other hand, Costco Wholesale's board of directors has no immediate plans to announce a stock split, as they believe shareholders have access to fractional-share purchasing through online brokers. Netflix, despite its growing streaming subscriber count and high share price, has less than 20% of its shares owned by non-institutional investors, which means there's no immediate need to conduct a split.
In conclusion, stock splits are strategic tools used by companies to adjust their share price and attract more investors. While they do not change the fundamental value of a company, they can have psychological effects and increase liquidity in the market. Overall, stock splits are interesting events that can signal potential future growth, though their impact is often intertwined with broader market trends and company performance.
- Given Meta Platforms' substantial cash reserves, a stock split could make its shares more accessible to its large base of everyday investors, capitalizing on the user-investor demographic.
- On the flip side, Costco Wholesale's board does not see a need for a stock split due to the availability of fractional-share purchasing through online brokers.
- In the realm of technology, businesses like Meta Platforms are leveraging stock splits as strategic tools to lower their share prices, increase accessibility, and attract more retail investors in a dynamic world of finance and investing.
