Public companies are always happy when their stock prices rise. But sometimes a company is so successful that its stock price rises too high. For that reason, it may implement a stock split.
A stock split divides each existing share of stock into multiple shares. It doesn’t inherently create or destroy value. But stock splits are considered bullish catalysts and good news for investors. They’re a sign that a company has performed well and a vote of confidence in its future.
What is a stock split?
A stock split divides each share of a company’s stock into multiple shares. The board of directors typically determines the ratio of the stock split. For example, a 2-for-1 stock split means each existing share of stock is split into two shares.
The key thing to understand about stock splits is your ownership stake doesn’t change. When each share of stock is split, the ownership stake each share represents is also split. Because a stock split splits ownership, it also reduces a stock’s share price.
Imagine a company undergoing a 3-for-1 stock split. When a single share of stock is split into three shares, its ownership stake is also split. Theoretically, its share price is also initially divided by three.
Companies can also issue reverse stock splits. In a reverse stock split, multiple shares of stock are combined into a single share. Struggling companies often implement reverse stock splits. Many popular stock exchanges require that stocks maintain minimum share prices to be listed. Reverse stock splits are a common way for companies with extremely low share prices to keep their listings.
What stocks will split in 2024?
Companies must gain shareholder approval to implement stock splits. Once shareholders vote, the split date is announced weeks or months in advance.
Several stock splits have already been announced for the second half of 2024. MicroStrategy (MSTR), which currently trades at more than $1,600 per share, will split its stock next month. The Virginia-based AI company will split its stock 10-for-1 on Aug. 7 after the market closes.
Takashimaya (TKSHF) plans to implement a 2-for-1 stock split on Aug. 30. Sony (SONY) is conducting a 5-for-1 stock split on Oct. 1.
You can refer to an online calendar to keep up with upcoming splits and reverse splits.
Will Apple stock split in 2024?
Apple (AAPL) has a long history of stock splits. But it seems unlikely that the company will implement another one in 2024. Apple’s last stock split was a 4-for-1 split on Aug. 28, 2020. AAPL’s price was above $380 when the split was announced.
See the interactive chart below for Apple’s current stock price.
Will Microsoft stock split in 2024?
Microsoft (MSFT) also has a history of stock splits. The company will likely split its stock in the near future. MSFT’s price of more than $450 on July 12 is much higher than its last split price of $48.30. Microsoft completed its previous stock split on Feb. 14, 2003.
See the interactive chart below for Microsoft’s current stock price.
Will Amazon stock split in 2024?
Amazon (AMZN) has split its stock several times. It might announce a split in 2024 or 2025.
The company completed a 20-for-1 split on June 6, 2022. AMZN’s price was above $2,780 in March 2022 when the split was announced.
See the interactive chart below for Amazon’s current stock price.
Top stocks to watch for a stock split
There are three key factors to consider when predicting possible stock splits. The first is share price. Companies typically split their stock only when their share prices get prohibitively high. Stocks with share prices of $400 or more are good targets.
Second, look for stocks trading at or near all-time highs that have performed exceptionally well. An underperforming company likely won’t opt for a stock split even if its share price is high.
Third, look for a company with a history of stock splits. Some companies prefer not to split their stock.
Here are several potential stock split candidates in 2024:
- Booking Holdings’ (BKNG) share price is more than $3,900 as of this writing. On June 16, 2003, the company conducted a 1-for-6 reverse stock split.
- AutoZone (AZO) last split its stock on April 21, 1994. As of July 12, AZO was trading at $2,943.
- Fair Isaac (FICO) has issued four stock splits in its history, most recently on March 11, 2004. As of July 12, FICO traded at $1,595 per share.
- Additional stock split candidates include Lam Research (LRCX) and Coca-Cola Consolidated (COKE).
Notable stock splits in 2024
So far in 2024, several high-profile stock splits have occurred. The major rally in artificial intelligence-related technology stocks has prompted several AI stocks to split. Other blue-chip stocks have benefited from the major rally in stock prices since 2008.
Broadcom stock split
Chipmaker Broadcom (AVGO) completed a 10-for-1 stock split on July 12 after market close. Before the split, the AI technology rally had driven the company’s stock price above $1,700 per share. The 2024 split was the first in the company’s history.
Chipotle stock split
Chipotle Mexican Grill (CMG) completed a 50-for-1 stock split on June 26. Before the split, the company’s stock price was above $3,200 per share. The split was the first since Chipotle’s initial public offering in January 2006, when its price was just $22.
Nvidia stock split
Nvidia (NVDA) has performed exceptionally well as an investment in the past decade. The company has completed two stock splits in the past three years alone. On July 20, 2021, it implemented a 4-for-1 stock split. It also completed a 10-for-1 split on June 7, when its stock price exceeded $1,200.
GE stock split
General Electric (GE) completed a different type of restructuring in 2024. On April 2, GE completed a spinoff of its energy business into a separate company. Unlike a stock split, which splits shares of stock, a spinoff splits the company into separate public companies. Each GE shareholder received one share of the new GE Vernova (GEV) for every four shares of GE stock they held.
Walmart stock split
Walmart (WMT) completed a 3-for-1 stock split on Feb. 22 after the market closed. Before the split, the company’s stock price had climbed above $170 per share. The 2024 split was Walmart’s first since 1999.
What happens when a stock splits?
When a stock splits, investors don’t need to take any action. Changes to holdings will occur automatically in brokerage or other investment accounts. Typically, the share price of the split stock will drop by the same ratio as the stock split. For example, a stock trading at $100 before a 5-for-1 stock split will trade at around $20 following the split.
Traders and investors often see stock splits as bullish catalysts and buying opportunities.
Jared Woodard, a Bank of America investment strategist, told USA TODAY that stocks that implement splits have generated an average one-year return of 25% or more from the date of the stock split. Likewise, stocks that implement reverse splits have tended to underperform.
Following a stock split, nothing changes about the underlying company or its business. The stock split doesn’t impact overall financial numbers, such as net income or revenue. But it affects financial metrics that are calculated on a per-share basis. For example, a company’s earnings per share, or EPS, will be divided by the split ratio.
Stock splits can also have implications for chart-based technical analysis. A split can cause a stock’s price to jump dramatically, potentially disrupting technical trading patterns. If you trade based on technical indicators, ensure any charts you use are adjusted for the split.
Frequently asked questions (FAQs)
Stock splits can reduce a stock’s price if it has reached a level so high that even a single share is too expensive for retail investors. A lower share price can also provide a psychological incentive for investors to buy because it makes a stock seem cheap.
A reverse stock split is a stock split in which multiple shares of existing stock are combined into a single share. This reduces the total number of shares and boosts a stock’s share price.
No, a stock split does not directly alter the value of your investment. It will change the number of shares you hold in your account. But a similar ratio will also reduce the stock’s share price.
Yes. Typically, a stock’s dividend per share is reduced by the same ratio as the stock split. As a result, the dividend per share is reduced. But the stock’s dividend yield remains roughly the same.
Stock splits typically take place when the market is closed. A stock will finish one day at the presplit price and begin trading the following day at the postsplit price.
