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Wall Street’s Stock-Split Trends Amid Market Volatility
Over the past two months, Wall Street has experienced significant volatility. However, the previous two years were largely bullish. Between early December 2024 and mid-February 2025, the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all reached record highs.
The rise of artificial intelligence (AI) has been a major driver of this bull market. According to PwC, AI is expected to contribute $15.7 trillion to the global economy by 2030. In addition, excitement around stock-split stocks has also played a significant role.
Stock-Split Euphoria Drives Gains in 2024
A stock split allows a publicly traded company to adjust its share price and the number of outstanding shares without changing its market cap or operational performance. These splits can either be forward or reverse, with the former being more popular among investors.
Forward splits, which decrease a company’s share price, make stocks more accessible to everyday investors. In contrast, reverse splits aim to raise the price and often indicate a company’s operational struggles, as seen with some delisting concerns from major U.S. exchanges.
In 2024, several high-profile companies executed forward splits, including AI leaders Nvidia and Broadcom, along with retail giant Walmart and fast-casual restaurant chain Chipotle Mexican Grill.
Investors usually monitor companies that undertake forward splits, as these businesses have historically outperformed the S&P 500 in the year after announcing a split. Recently, a significant forward split announcement for 2025 was made—yet it wasn’t from a well-known brand, as many had anticipated.
Identifying Potential Stock-Split Candidates
Determining which stocks are likely to announce a forward split can be challenging. Some companies, such as Berkshire Hathaway, explicitly choose not to split their shares. Additionally, the percentage of shares owned by institutional investors versus retail investors impacts the decision to conduct a split. Higher institutional ownership reduces the need to make shares more “affordable.”
Even with these considerations, many investors hoped to see high-profile companies declare a forward split in 2025. For example, streaming platform provider Netflix (NASDAQ: NFLX) has recently surpassed $1,000 per share. Netflix has a history of splits, including one in 2015 when shares were around $700. However, fewer than 20% of its shares are owned by retail investors, making a split unlikely.
Costco Wholesale (NASDAQ: COST) is another strong candidate that has not yet proceeded with a split. Its shares also hover near $1,000. Although around 36% of its shares are held by individual investors, management has cited the rise of fractional-share purchasing as a reason for hesitance regarding a split.
Another potential candidate is Meta Platforms (NASDAQ: META), the parent of Facebook and Instagram. Meta shares peaked at around $740 in February, and as the only “Magnificent Seven” stock to never split, it seemed logical for Meta to consider this option. About 28% of Meta’s shares are owned by retail investors, suggesting a case for a split. However, recent market volatility may have dampened this demand.
Introducing Wall Street’s First High-Profile Stock Split of 2025
Amid the prevailing volatility, one…
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O’Reilly Automotive Announces Significant Stock Split for 2025
O’Reilly Automotive, a well-known player in the auto parts sector and an S&P 500 component, has declared its first forward stock split in two decades. This marks only the fourth stock split since the company went public in April 1993. The announcement signifies a positive move for Wall Street as O’Reilly prepares for its major (NASDAQ: ORLY) stock split in 2025.
Details of the Split
On March 13, O’Reilly’s board approved a remarkable 15-for-1 forward split. If shareholders approve this measure at the annual meeting on May 15, the split will take effect after the close of trading on June 9. This adjustment aims to simplify stock purchases for employees, allowing them to buy whole shares rather than fractions through their stock purchase plan, which offers a 15% discount.
Performance Analysis
Since its last stock split 20 years ago, O’Reilly Automotive’s stock has surged more than 4,500%. Such remarkable growth is attributed to favorable macroeconomic conditions and strategic decisions made by its management. The aging vehicle population on U.S. roads has significantly benefited auto parts suppliers like O’Reilly. According to S&P Global Mobility, the average age of cars and light trucks in the U.S. climbed to 12.6 years in 2024, up from 11.1 years in 2012. Given the high costs associated with new vehicles, many drivers continue to rely on existing cars, further driving demand for O’Reilly’s products.
Distribution Strength and Stock Buybacks
O’Reilly’s efficient hub-and-spoke distribution network supports its impressive performance. With 31 regional distribution centers and nearly 400 hub stores, O’Reilly guarantees access to over 153,000 stock-keeping units (SKUs) on a same-day or overnight basis. Added to this, the company has a commendable share repurchase program in place. Since January 2011, O’Reilly has repurchased 96.5 million shares for $25.94 billion, reducing its outstanding shares by 59.4%.
This significant share count reduction has positively influenced its earnings per share (EPS), making the stock increasingly attractive to investors. The company has demonstrated resilience, with demand for auto parts maintaining stability even during economic downturns. This trend suggests that O’Reilly Automotive’s stock may continue to climb over the long term.
Investment Considerations
Before considering an investment of $1,000 in O’Reilly Automotive, it is prudent to assess the broader market landscape. Recently, analysts from Motley Fool Stock Advisor identified what they believe are the ten best stocks for current investment. Notably, O’Reilly Automotive did not make this list, highlighting the need for potential investors to explore various options.
For those weighing the decision, it is essential to recognize the historical performance of stocks that have been recommended in the past, such as Netflix and Nvidia, both of which significantly increased in value since their initial recommendations.
The insights shared here represent the author’s analysis and do not necessarily reflect the views of Nasdaq, Inc.
