Investors are on watch this morning as American networking company Arista Networks (NYSE:ANET) had a stock split to start the day. Indeed, Arista isn’t down 75%, so much as one share of the company yesterday is now worth four shares today.
As stated in Arista’s earnings report this month, the four-for-one stock split is really an opportunity to further ANET stock’s growth and reap additional funding.
“Arista’s board of directors has also approved a four-for-one stock split to make the stock more accessible to a broader base of investors. Each Arista shareholder of record at the close of business on November 11, 2021 will receive three additional shares for every share held on the record date, and trading will begin on a split-adjusted basis on or about November 18, 2021.”
From $528 a share to $130 today, Arista may have alarmed some shareholders deceived by the impressive price drop. But worry not, this can likely be read as good news related to the health of the company.
How Does the Stock Split Affect ANET Stock’s Outlook?
In the short term, Arista is more appetizing to investors. At just one quarter it’s previous price, Arista can once again entice new investors to the stock. After a fairly lukewarm earnings call to start the month, Arista is giving investors reason to be bullish.
Arista is known for providing modern network solutions in a variety of capacities. It recently announced plans to build the national campus network for the Australian Securities Exchange (ASX). This comes in addition to reports of its new Wi-Fi 6E access points, which will offer customers more bandwidth and lower latency.
The prospectus on ANET stock is generally positive. JP Morgan Chase analyst Samik Chatterjee gives Arista a buy rating. Chatterjee set a Nov. 10 price target of $590, which converts to $147.50 post-split.
On the date of publication, Shrey Dua did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.