This Magnificent Seven Stock Will Be Next to Split Its Stock

When a stock keeps hitting new highs, it gets expensive for investors. While it does speak about the company’s potential and growth, retail investors shy away from putting over $500 in a single stock. This is when the management considers a stock split. It divides the existing shares into multiple shares and it increases the number of outstanding shares for the company. 

Meta Platforms Inc. (NASDAQ: META) stock is on a rally and is exchanging hands for $683, the stock isn’t cheap and has hit $700 recently. This makes retail investors wonder whether the company will announce a stock split anytime soon. Since the company hasn’t split its stock ever before, it could take the first step now. It has hit a range where most of its tech peers have announced a stock split. The purpose of any stock split is to make the stock more accessible for investors, it doesn’t change anything for the company. 

The tech giant has become a household name today. It holds a basket of social media apps that continue to generate revenue year after year. All of us own at least one of its apps, placing Meta in the Magnificent Seven along with the other industry stalwarts. 

Key points in this article:

• Meta is a financial powerhouse and has reported solid numbers in the fourth quarter.
• The stock hit $700 recently, which might lead the management to consider a stock split.
• While a stock split changes nothing about the company, it makes the stock cheaper for investors to own.
• If you are looking for a stock with massive upside potential, grab a complimentary copy of our “The Next NVIDIA” report which features a stock with a tremendous upside potential.  

Meta stock is on a rally 

Meta’s stock soared 350% in the past two years and it is also one of the only Magnificent Seven that hasn’t split the stock. Considering the growing advertising revenue and high investments in AI, the split can help expand its 72% institutional ownership base.

The stock is up 14% year-to-date and 41% in the year. The stock is on a rally since the company has announced strong quarterly results and increased AI spending. 

Some of the top tech stocks including Apple Inc. (NASDAQ: AAPL) and Nvidia Corp. (NASDAQ: NVDA) have undergone stock splits in the past. Nvidia announced a stock split in 2021 and another one in 2024 where the stock was trading at $1,200 per share. Next, Apple announced a 4-for-1 stock split in 2020 when it was trading close to $500. Tesla (NASDAQ: TSLA) underwent a stock split in 2020 and then in 2022. A stock split shows the confidence of the company in generating strong returns in the future. You will not see a company that is not doing well announce a stock split. Only when the stock hits a high level, the management will decide to undergo a split. 

There are different reasons why Meta may consider a stock split this year. Since a split reduces the value of the stock, it becomes easier for retail investors to own it. Although nothing changes with the stock, it seems much cheaper to the investors. It also becomes easier to access fractional shares of Meta after a split. 

Investors will find it cheaper to buy stock after a stock split since its value will decline. However, if you already own the stock, you will have more shares without having to pay anything for them. If you hold the stock for the long term, you could take home big gains. The stock price often rises after a split. 

Meta is a financial powerhouse

Meta generates significant advertising revenue through multiple social media apps. The company generated $48.39 billion in revenue in the fourth quarter, up 21% year-over-year and an EPS of $8.02. Marketers are going to choose Meta Platforms for their ads since the company boasts 3.35 billion active daily users.

Despite the competition, no other app has been able to come close to Meta and I believe it will continue its domination in the coming years. It plans to spend between $60 billion to $65 billion on capital expenditure for AI development. 

Meta is not generating returns from AI investments yet but there are different avenues and the possibility is huge. The AI industry is massive and we are in the growth stage right now. Wall Street wasn’t happy with Meta’s planned expenditure for the year. However, I believe Meta has the potential to stand tall amidst market volatility and there is no other company that can come close to its dominating position in the social media industry.

While there is no guarantee that Meta will go for a stock split, the chances are high. Nevertheless, the stock is a buy and a stock split will only take it higher. 

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