Shares of Nasdaq (NASDAQ:NDAQ) stock are in full focus today after the company announced first-quarter earnings and a 3-for-1 stock split. For the period, the financial services company reported revenue of $1.54 billion, down nearly 7% year-over-year (YOY) from $1.65 billion. Meanwhile, earnings per share (EPS) came in at $1.97, beating analyst estimates of $1.95. Currently, NDAQ stock is down more than 4%.
On top of earnings, Nasdaq also reported that its board had approved an 11% increase to the quarterly dividend. The quarterly dividend now stands at 60 cents.
So, with that in mind, let’s jump into the details on the Nasdaq stock split. Here’s what investors should know moving forward.
NDAQ Stock Initiates 3-for-1 Stock Split
The highlight of Nasdaq’s earnings report seems to be the 3-for-1 stock split. However, NDAQ shareholders must vote to approve the stock split before it can occur. Shareholders will be able to vote for or against the split at the 2022 Annual Meeting, which will occur on June 22. The company also needs the permission of the U.S. Securities and Exchange Commission (SEC) to initiate the split due to its “operation of national securities exchanges.” If successful, the split will be completed sometime during Q3. The exact date was not specified.
Of course, investors should note that it’s NDAQ stock that will be split if approved — not the Nasdaq 100 or the Nasdaq Composite Index. Nasdaq is the controlling entity of these two indices.
If the stock split does occurs, shareholders will also have three shares for every one share of NDAQ stock that they own. This does not mean shareholders will own more of the company, though, as the market capitalization will remain constant. The price of NDAQ stock will also be split into thirds and the number of shares outstanding will triple.
Stock splits don’t change the fundamentals of a company. However, advocates argue that a split can increase liquidity by providing a more accessible, lower share price.
What Else Should You Know About Nasdaq’s Earnings?
There’s more news than just the split, however. In particular, Nasdaq announced that it had repurchased $467 million of its common stock during the quarter as well. Share repurchases help drive up the price of a stock by reducing the number of shares outstanding. On top of this, the company reported that average daily trading volumes in the U.S. fell as investors weighed “uncertain macroeconomic conditions.”
CEO Adena Friedman commented the following on Nasdaq’s quarter:
“Our record revenue performance this quarter is further evidence that Nasdaq can deliver consistently in multiple operating environments. This sustained growth is testament to the tangible and wide-ranging value we are delivering to our clients throughout the financial ecosystem.”
On the date of publication, Eddie Pan did not hold (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.
