Investors are always on the lookout for companies that might be the next to announce a stock split, especially after Chipotle revealed its plans to split its stock 50-shares-for-1 in June. The announcement caused Chipotle’s shares to surge by more than 5% on Wednesday. Historically, stocks that have undergone splits have seen positive performance in the months following the move, such as Amazon which saw a 4% increase after its 2022 split.
Stock splits are a way for companies to make their shares more affordable without changing the overall value of the business. For example, after a 2-for-1 split, holders of one share of a $20 stock would now have two shares of a $10 stock. CNBC recently used their Stock Screener tool to identify companies with high share prices that could be potential candidates for a stock split. One such company identified was Chipotle, even before their recent announcement.
Nvidia, a prominent chipmaker and leader in artificial intelligence, was also highlighted as a possible candidate for a stock split. CEO Jensen Huang mentioned during CNBC’s GTC Conference that the company would consider a split in the future, citing easier access to stock purchases for employees and others as a benefit. Netflix, a dominant streaming platform, has a history of stock splits, with the most recent one being a 7-to-1 split in June 2015.
Stock splits can provide a temporary lift to a company’s stock price as they increase accessibility for individual investors. This can be seen in the case of Nvidia, which has seen its shares soar by 79% in 2024 alone. JPMorgan reiterated a positive outlook on Netflix, noting its potential for revenue growth and positioning in the market. Other high-priced stocks with a history of stock splits, such as Eli Lilly and Lam Research, were also mentioned as potential candidates for future splits.
Overall, stock splits can be a strategic move for companies to attract more investors and increase liquidity in their stock. It will be interesting to see which companies follow in Chipotle’s footsteps and announce stock splits in the near future.
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