When a company decides to split its stock, it generates a lot of excitement. A stock split occurs when a company increases its number of shares outstanding by dividing existing shares or by multiplying the share count and reducing the share price to compensate. A stock split lowers share prices but doesn't change the fundamental value of a business or the total value of the shares owned by shareholders.
Stock splits in a growing business attract a lot of retail investor attention. For example, after its recent split was announced, the stock price of Nvidia (NVDA 3.43%) (10-for-1 split on June 7, 2024) zoomed higher.
Retail Investor
As of this writing, few high-profile stock splits are scheduled for the rest of 2024. That said, there has been speculation that mega-cap technology stocks Microsoft (MSFT 1.06%) and Meta Platforms (META 4.23%) could announce stock splits of their own in the not-too-distant future.
Other stocks to watch out for that could split in 2024 or 2025 include the following:
- Credit rating and financial analytics company Fair Isaac (FICO 0.09%) hasn't split its stock since 2004. After a 20-year hiatus, its shares were trading for around $2,000 in November 2024.
- Booking Holdings (BKNG 0.12%) -- at the time, known as Priceline.com -- did a reverse stock split in 2003 in the aftermath of the dot-com bubble. Every six shares investors owned at the time were consolidated into one share. Each share was worth more than $4,700 by November 2024.
Stock splits in 2024
Stock splits in 2024
With the stock market's ongoing rise following the 2022 bear market, 2024 was a fairly active year for stock splits. Several high-profile stock splits made headlines. Here's what you need to know about the most notable stock splits from 2024 that have already happened or have been announced.
| Company | Stock Split | Announcement Date | Effective Date |
|---|---|---|---|
| Super Micro (NASDAQ:SMCI) | 10-for-1 | Aug 6, 2024 | Oct. 1, 2024 |
| Deckers Outdoor (NYSE:DECK) | 6-for-1 | Sep. 9 2024 | Sep. 16, 2024 |
| Microstrategy (NASDAQ:MSTR) | 10-for-1 | July 11, 2024 | Aug. 1, 2024 |
| Broadcom (NASDAQ:AVGO) | 10-for-1 | June 12 2024 | July 15, 2024 |
| Chipotle Mexican Grill (NYSE:CMG) | 50-for-1 | March 19 2024 | June 25, 2024 |
| Walmart (NYSE:WMT) | 3 for 1 | Jan 30 2024 | Feb 26, 2024 |
1. Super Micro
Server company Super Micro Computer announced a 10-for-1 stock split in August 2024. The company paid out an extra 9 shares of stock for every share owned by shareholders. The distribution took place at market close on Oct. 1, 2024.
2. Deckers Brands
The parent company of UGG, Teva, and other popular apparel brands announced the approval of its split following its 2024 annual meeting. For shareholders of record on Sept. 6, 2024, Decker executed a 6-for-1 split by paying five extra shares for every share owned. The distribution took place at market close on Sept. 16, 2024.
3. MicroStrategy
MicroStrategy announced its 10-for-1 stock split on July 11, 2024. Shareholders of record on Aug. 1 received nine additional shares for each share they owned. The distribution took place at the close of market on Aug. 7, 2024.
4. Broadcom
Massive technology company Broadcom announced its 10-for-1 stock split along with its second-quarter earnings report on June 12, 2024. Shareholders of record on July 11 received an additional nine shares for each share they owned. The distribution took place on July 15.
5. Chipotle
The highly successful restaurant operator announced a 50-for-1 stock split (one of the largest in NYSE history) on March 19. For every share owned, 49 new shares were distributed, and the stock began trading on a split-adjusted basis on June 26.
6. Walmart
The massive retailer announced a 3-for-1 stock split in late January, which it completed in late February 2024. The split was completed to make the company's shares more accessible to retail investors.
Why companies do stock splits
Why companies do stock splits
Stock splits (as well as reverse stock splits) typically don't change the fundamental value of a company. They also don't change an investor's ownership stake in the company. For example, if you own a slice of pizza equal to one-quarter of the whole pie, cutting your slice up into smaller pieces doesn't change that you still have one-quarter of the total pizza.
Since a stock split doesn't really fundamentally change anything, why would a business choose to do one? Often, it has to do with attracting new investors. A smaller price per share gets a lot of individual investors interested in a popular company.
Additionally, many publicly traded companies give employees an ownership stake in the business by granting them shares in the form of stock-based compensation. A smaller share price can help a business manage the benefits issued to its employees.
Employee Stock Ownership Plan (ESOP)
Also, many companies repurchase shares as part of a return on investment to existing shareholders. A smaller share price can help a company manage the purchases and returns to investors.
Take Amazon (AMZN 1.52%) as an example. In the filing for its stock split in 2022, the company stated: "The stock split would give our employees more flexibility in how they manage their equity in Amazon and make the share price more accessible for people looking to invest in the company."
Related investing topics
Should you invest?
Should you buy a stock because of an upcoming split?
If you are a long-term investor who plans to own shares of a company for at least a few years, an upcoming stock split is no reason to buy an ownership stake in a business. A company generally has good reasons for initiating a split, but it doesn't change the fundamental value for shareholders.
Rather, look for companies benefiting from long-term secular growth trends, growing faster than their peers, and with healthy profit margins and balance sheets.
FAQ
Upcoming stock splits FAQ
Is it good if my stock splits?
Not necessarily. Sometimes, market interest in a stock increases when a stock split is announced. However, any stock price gains are temporary if the business's financial results don't increase to support the stock price speculation.
Do stocks rise after a split?
Sometimes. Due to increased retail investor interest in a smaller per-share price, often due to the misconception that a stock split makes a company "cheaper," a stock may go up after a split. But any gains tend to be temporary unless the business generates higher corresponding financial results.
How do you know when a stock is going to split?
There's no way to tell for sure whether a company's management team and board of directors will announce a stock split. However, strong business performance and a track record of stock splits might make an upcoming announcement of a stock split more likely.
What does it mean when a stock splits?
A stock split does not change the fundamental value of the business. Think of it like slicing a pizza into smaller slices: The overall pizza remains the same size, but more slices are available.
