Meta Platforms Poised for Growth: Is a Stock Split Next?

In 2024, stock splits gained momentum across major companies, from Walmart to Chipotle Mexican Grill. Leading the trend in the artificial intelligence (AI) sector, Nvidia and Broadcom both executed significant 10-for-1 stock splits.

Understanding the Appeal of Stock Splits

What’s the allure of stock splits for investors? Although splits don’t impact a company’s core fundamentals, they lower the price per share, making investments more accessible to a broader audience. These splits often signal management’s confidence in the stock’s potential for future growth from a lower price point.

Start Your Mornings Smarter! Sign up for Breakfast news delivered to your inbox every market day. Sign Up For Free »

An AI Leader on the Verge of a Split?

Investors keep a close watch for stock splits, especially from companies that have seen their share prices soar. One AI giant appears ready for this move. This company’s stock surged 65% last year and is currently priced over $600. I predict that this recognizable name will be the next AI company to announce a split.

Image source: Getty Images.

The Lone “Magnificent Seven” Stock Without a Split

Before revealing the name of this company, consider this clue: it stands out as the only member of the “Magnificent Seven”—the stocks that propelled last year’s market advances—never to have executed a stock split. I’m referring to Meta Platforms (NASDAQ: META), which owns popular social media platforms like Facebook, Messenger, WhatsApp, and Instagram.

Meta sees significant revenue and profits due to its vast user base—over 3.2 billion individuals engage with its apps daily. As a result, its shares have tracked upward, currently nearing record highs.

Much of Meta’s revenue stems from advertising, with advertisers eager to connect with users on its platforms. Recently, the company has increased its focus on AI, marking it as a primary investment area last year, with intentions to expand this investment further in 2025.

Bridging Users and AI Technology

CEO Mark Zuckerberg aims to develop AIs that serve all Meta users in various aspects, from work to entertainment. The company is currently training its own large language model (LLM), Llama 4. During the latest earnings call, Zuckerberg noted a rapid rise in the adoption of Meta AI—the company’s first AI assistant—and indicated that Llama is quickly becoming a standard in the industry.

Meta’s investment in AI can yield multiple benefits. Increased app usage driven by AI tools can attract more advertisers seeking to engage users, translating to higher revenue for Meta. Additionally, AI developments may lead to new products and services, while engaging with the developer community could enhance Meta’s status as an AI leader.

Timing a Potential Stock Split

Why do I believe now is an ideal time for a Meta stock split? At over $600, some investors might hesitate due to the high price, even if the stock’s valuation is reasonable at 24x forward earnings estimates. The $1,000 per share threshold poses a mental barrier for many investors, often discouraging them from investing, regardless of intrinsic value.

Additionally, not all investors have access to fractional shares, which may limit their ability to invest in Meta at current pricing. A stock split would lower the price per share, allowing more potential buyers to enter the market.

Considering these factors and Meta’s growth trajectory fueled by AI investments, the stock has strong potential to escalate from a lower price. This supports my prediction that Meta is likely to announce a stock split soon. However, even if it doesn’t, Meta remains a strong candidate for long-term growth.

Seize a Second Chance at Investment

Ever feel like you missed out on investing in top stocks? Here’s an opportunity not to overlook.

Occasionally, our analysts issue a “Double Down” stock recommendation for companies expected to rise. If you fear you’ve missed your opportunity, now could be the perfect time to act.

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $357,084!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $43,554!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $462,766!*

We are currently issuing “Double Down” alerts for three noteworthy companies, and this may be your last chance to invest.

See 3 “Double Down” stocks »

*Stock Advisor returns as of January 13, 2025

Randi Zuckerberg, a former market development director and spokesperson for Facebook and sister to Meta’s CEO Mark Zuckerberg, is a board member of The Motley Fool. Adria Cimino is not invested in any stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill, Meta Platforms, Nvidia, and Walmart. The Motley Fool also recommends Broadcom and recommends shorting options on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.