In Wall Street, attention is focused on who will be the next to conduct a stock split following AI giant Nvidia. Meta Platforms, the only member of the so-called 'Magnificent 7' that has never split its stock, is being considered as the potential candidate. Meta's stock price has soared by 450% compared to its 2022 low, fueled by the AI rally.
Bloomberg reported on the 11th (local time) that as the number of companies conducting stock splits increases, Wall Street analysts are naming Meta Platforms as the next company likely to execute a stock split.
On that day, Meta's stock closed at $507.47 per share, up 0.97% from the previous session on the New York Stock Exchange. Although it slightly declined after hitting an all-time high of $531.49 in April, it remains more than 450% above its 2022 low. It has also risen over 43% since the beginning of the year.
Ken Mahoney, President of Mahoney Asset Trading, noted that Meta's stock price is exceeding the $500 per share level, which investors watch as a benchmark, and evaluated that "Meta is ripe enough for a split."
Expectations for a stock split around Meta have especially expanded following Nvidia's recent 10-for-1 split. Meta is the only company within the Magnificent 7 big tech stocks that has no history of stock splits.
Since 2022, four of the Magnificent 7 stocks?Google Alphabet, Amazon, Tesla, and Nvidia?have conducted stock splits. Apple split its stock earlier in 2020. Microsoft (MS) has not split its stock for over 20 years and is considered a potential candidate for another split, but it has not yet reached the $500 per share level, Bloomberg added.
Typically, when a stock split occurs, the price per share decreases, making it easier for small individual investors to invest and expanding capital inflows. Bloomberg analyzed that this could even increase Meta's chances of being included in the Dow Jones Industrial Average.
Bank of America (BoA) stated, "Nvidia's split is a signal that more activity will occur in tech stocks," naming Broadcom, Lam Research, and Netflix as other potential stock split candidates. However, BoA also pointed out that not all stock splits lead to stock price increases. About 30% of companies that conducted splits saw their stock prices decline 12 months later. Trivariate Research also noted that Tesla and Nike experienced sluggish performance the year following their splits.
Meanwhile, optimism has grown that Nvidia's stock price will continue its rally after the stock split. Oppenheimer issued an overweight rating on Nvidia, citing the effects of the stock split and the AI investment competition among governments worldwide as reasons. The target price was set at $150 per share, well above the current $120 level. Navellier & Associates also predicted that Nvidia's market capitalization could surpass Microsoft’s to become the largest in the world.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
