2024: A Banner Year for Wall Street Fueled by Stock Splits

As the year 2024 wraps up in just a few days, Wall Street investors celebrate a remarkable year. The Dow Jones Industrial Average, benchmark S&P 500, and tech-heavy Nasdaq Composite have posted gains of 14%, 25%, and 32% respectively as of December 23.

Key Drivers of Market Growth

A mix of factors has contributed to the surge in major stock indexes. The rapid adoption of artificial intelligence (AI), impressive corporate earnings, and the political landscape following Donald Trump’s November victory played significant roles. Historical trends reveal that the Dow, S&P 500, and Nasdaq Composite previously climbed during Trump’s first term in office.

Where can you invest $1,000 now? Our analysts have highlighted the 10 best stocks to consider. See the 10 stocks »

Stock Splits Capture Investor Interest

This year, a lesser-known but powerful driver of this bull market has been the excitement around stock splits. A stock split is a method that publicly traded companies use to adjust their share price and outstanding shares without impacting their market capitalization or operational performance. In 2024, many leading businesses favored forward splits, a type that reduces share prices to make them more accessible to investors who can’t purchase fractional shares.

Historically, stocks that undergo forward splits tend to outperform the broader market. Research from Bank of America Global Research shows that these stocks have achieved an average return of 25.4% in the year following their announcement, compared to just 11.9% for the S&P 500 during the same period.

Several notable firms, including AI innovators Nvidia, Broadcom, and Super Micro Computer, executed stock splits this year. Investors are now keenly interested in identifying the next potential split candidate, especially from the well-known “Magnificent Seven” companies.

Meta Platforms: The Standout Candidate for Stock Splitting in 2025

The Magnificent Seven refers to seven leading public companies, ranked by market capitalization:

• Apple
• Nvidia
• Microsoft
• Alphabet
• Amazon
• Meta Platforms (NASDAQ: META)
• Tesla

Collectively, these companies have significantly outperformed broader market indexes and possess strong competitive advantages. Among them, Meta Platforms stands out as it has never executed a stock split.

As of December 23, Meta shares approached $600 after surpassing this figure just weeks earlier. Without a stock split, retail investors may find it difficult to buy shares of the parent company of Facebook.

Reasons Behind Meta’s Expected Stock Split in 2025

Rising share prices often lead to stock split announcements. Given Meta’s solid financial position and competitive edge, it seems well-positioned for continued growth as 2025 approaches. While Meta’s ventures into AI and the metaverse capture attention, it’s essential to recognize its dominance in social media, which boasts an impressive 3.29 billion daily active users across its platforms, including Facebook and Instagram. This user base enables Meta to command strong pricing for advertisements, which currently constitutes about 98% of its revenue.

Historically, advertising spending has remained strong during economic expansions, with the U.S. experiencing prolonged periods of growth post-recession. With $70.9 billion in cash and equivalents, Meta is one of the few companies able to invest boldly in the growing AI sector, purchasing 350,000 H100 GPUs from Nvidia for around $10.5 billion. This investment positions Meta for a significant role in the metaverse as the decade progresses.

Meta’s valuation also presents a compelling case. While companies like Apple and Nvidia have higher earnings multiples, Meta trades at less than 24 times its expected forward earnings, despite projections of over 21% annual growth in earnings per share until 2027.

It appears Meta Platforms is poised to be Wall Street’s leading candidate for a stock split in 2025.

Seize the Opportunity for Future Gains

If you feel you missed out on investing in top-performing stocks, now may be your chance to act.

Occasionally, our analysts call for a “Double Down” stock recommendation—a signal that a company may be on the verge of significant growth. Consequently, investing now could be wise before investment opportunities slip away. The past performance of these “Double Down” stocks is noteworthy:

• Nvidia: A $1,000 investment from 2009 is now valued at $363,593!*
• Apple: A $1,000 investment from 2008 has grown to $48,899!*
• Netflix: A $1,000 investment from 2004 has surged to $502,684!*

Currently, we are issuing “Double Down” alerts for three remarkable companies; this may be a rare chance for investors.

See 3 “Double Down” stocks »

*Stock Advisor returns as of December 23, 2024

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, serves on The Motley Fool’s board of directors. Bank of America is an advertising partner of Motley Fool Money. Suzanne Frey, an executive at Alphabet, is also on The Motley Fool’s board. Randi Zuckerberg, a former director of market development at Facebook and sister to CEO Mark Zuckerberg, is included in the board. Sean Williams holds positions in Alphabet, Amazon, Bank of America, and Meta Platforms. The Motley Fool recommends various stocks, including Alphabet, Amazon, Apple, Bank of America, Meta Platforms, Microsoft, Nvidia, and Tesla. The Fool also advises on specific options for Microsoft. For further details, please refer to our disclosure policy.

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