Will Meta Platforms Finally Split Its Stock?

Stock splits often attract a lot of investor attention, and for good reasons.

Although stock splits don’t change a company’s intrinsic value, they lower the price per share, making it more appealing for retail investors. Additionally, a stock split serves as a milestone for a company’s growth, as it effectively resets its stock price for potential future increases.

Research from Bank of America suggests that stocks may perform better in the year following a split. This can occur because companies often split their shares after experiencing significant gains. It’s unlikely management would pursue a split if they anticipated a significant decline in stock value.

Meta Platforms (NASDAQ: META) is the only stock among the “Magnificent Seven” that has never undergone a split. In recent years, its peers, with the exception of Microsoft, have all completed splits:

• Apple: 4-for-1 stock split on Aug. 28, 2020
• Nvidia: 10-for-1 stock split on June 7, 2024
• Alphabet: 20-for-1 stock split on July 15, 2022
• Amazon: 20-for-1 stock split on June 3, 2022
• Tesla: 3-for-1 stock split on Aug. 25, 2022

So, will Meta Platforms follow suit and split its stock? Let’s explore the reasons that could lead to a split.

Reasons a Stock Split Might Be on the Horizon for Meta

Currently, Meta’s share price approaches $600, placing it among the highest-priced stocks in the S&P 500 index.

The company has been experiencing impressive growth, with revenue rising 19% to $40.6 billion, and a 26% increase in operating income to $17.4 billion. This growth suggests a strong operational performance, even as it faces challenges in its reality labs division.

With a price-to-earnings ratio of 28, the stock appears reasonably priced, and growth trends indicate it might continue to rise. Furthermore, Meta has been taking steps to become more shareholder-friendly, recently initiating a dividend and using surplus cash to repurchase shares.

Though the company hasn’t signaled any intention to split its stock, doing so could enhance shareholder satisfaction.

Importantly, a stock split might help Meta gain entry into the Dow Jones Industrial Average. Its high share price currently exceeds the typical range of stocks in the index, which generally sit between $50 and $500.

Is a Stock Split Likely for Meta?

The primary consideration regarding a stock split for Meta Platforms rests on CEO Mark Zuckerberg’s perspective. Leaders with a long-term vision might resist a stock split, believing it attracts short-term investors who may not align with the company’s strategic goals.

For instance, Amazon refrained from splitting its stock for over 20 years, guided by Jeff Bezos’ long-term philosophy. Similarly, Berkshire Hathaway has never split its Class A shares, offering Class B shares at a more accessible price instead.

Investors should pay attention to Zuckerberg’s insights during earnings calls and other discussions concerning his long-term vision and perspectives on stock splits.

At this stage, a split doesn’t seem to be on the immediate horizon, but changing market conditions could shift that outlook in the future. If Meta’s stock continues to gain, demands for a stock split may increase.

A Potential Opportunity: Don’t Miss Out

Have you ever felt like you missed an opportunity to invest in major successful stocks? If so, it’s worth considering what our team of analysts has to say.

Occasionally, they offer a “Double Down” stock recommendation for companies poised for significant gains. If you worry you’ve already missed your chance, now might be the right time for investment.

• Amazon: A $1,000 investment when we doubled down in 2010 would now be worth $22,819!*
• Apple: A $1,000 investment when we doubled down in 2008 would now be worth $42,611!*
• Netflix: A $1,000 investment when we doubled down in 2004 would now be worth $444,355!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and you may not have another chance like this soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of November 11, 2024

Bank of America is an advertising partner of Motley Fool Money. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Jeremy Bowman has positions in Amazon, Bank of America, and Meta Platforms. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Bank of America, Berkshire Hathaway, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

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