Could Palantir Technologies Be the Next Big Stock Split?
Last year saw a surge in “stock split” announcements from major companies, delighting many investors. Tech leader Nvidia, retail giant Walmart, and fast-casual favorite Chipotle Mexican Grill all engaged in this practice. What makes stock splits so appealing?
While it’s true that stock splits do not affect a company’s fundamentals, they do make shares more affordable. This opens up investment opportunities for more individuals. Additionally, a stock split often indicates a company’s confidence in its growth potential.
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One stock that may soon join the stock-splitting trend is Palantir Technologies (NASDAQ: PLTR). With a remarkable 340% increase in value last year, it’s a strong candidate for a split. Let’s explore this possibility further.
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Understanding Stock Splits
To grasp why stock splits matter, it’s essential to understand how they work. Typically, these splits occur after a company’s share price has risen significantly. For instance, a company trading at $1,000 per share might execute a 10-for-1 split. Afterwards, share prices would drop to $100, while existing shareholders would receive 10 shares for every one they owned prior.
It’s important to realize that stock splits do not alter valuation, market capitalization, or the actual value of an investment. However, lower prices per share can attract more potential investors. While fractional shares offer an alternative, many investors prefer purchasing whole shares.
Palantir is a viable candidate for a stock split consideration. Founded over 20 years ago and publicly listed since 2020, Palantir specializes in software solutions for government and commercial entities, assisting them in data-driven decision-making.
A Look at Palantir’s Market Journey
Since its IPO, Palantir has yet to announce any stock splits. Initially, its shares traded around $25 or less, and by the end of 2022, the stock had fallen over 30% from its IPO price. However, early 2023 brought a turnaround with the stock now trading around $80, amounting to an impressive 700% surge from its IPO. Despite this, some investors express concern about the current price, with the stock trading over 165 times forward earnings estimates. While a split could lower per-share prices, it wouldn’t impact the overall valuation.
The price movement is also not nearing the psychological barrier of $1,000, which sometimes deters investors from buying shares. Even if financial metrics seem reasonable, high prices can impact investor interest.
Palantir’s Growth Potential
Although Palantir is not a new company, it is experiencing early-stage growth due to two critical factors. The introduction of its Artificial Intelligence Platform in 2023 has created significant demand. Combined with the recent increase in commercial clients and revenues, this growth should positively influence earnings for several quarters ahead.
At its current share price, Palantir remains accessible to investors. While a stock split is not essential at this moment, future growth could prompt such a decision if the stock continues to rise.
Don’t Miss This Possible Investing Opportunity
Have you ever felt you missed your chance to invest in top performers? You may want to consider this advice.
In rare cases, our analysts recommend a “Double Down” stock—companies that they believe are on the brink of significant growth. If you think you’ve missed your investment window, now could be the perfect time to act. The data shows:
- Nvidia: An investment of $1,000 in 2009 would now be worth $369,816!*
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- Netflix: A $1,000 investment from 2004 would now amount to $527,206!
We are currently issuing “Double Down” alerts for three remarkable companies, and opportunities like these may not arise again soon.
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*Stock Advisor returns as of January 27, 2025
Adria Cimino holds no positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill, Nvidia, Palantir Technologies, and Walmart. The Motley Fool recommends shorting March 2025 $58 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.
The views and opinions expressed here are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
