Several high-profile stock splits have occurred recently. First, Nvidia (NASDAQ:NVDA) decided to implement a 10-for-1 stock split which took effect June 10. Shares are up slightly since then after a period of rapid price increases and subsequent cooling.
The stock more than doubled in 2024 causing the price to own a single share of Nvidia to surge above $1,000. Prices at that level tend to hurt demand, so splitting the stock is a logical choice. Ownership becomes more accessible, increasing demand.
Nvidia is not the only high-profile company to recently enact a stock split. Broadcom (NASDAQ:AVGO) announced a similar 10-for-1 split that will take effect on July 12. It is expected to have similar positive psychological effects for investors. Broadcom shares currently trade for $1,592, putting them out of the reach of many investors.
Alphabet (NASDAQ:GOOG,GOOGL), Amazon (NASDAQ:AMZN) and Tesla (NASDAQ:TSLA) all orchestrated stock splits in recent years. Let’s look at seven companies that might be up next.
ASML (ASML)
ASML (NASDAQ:ASML) seems to be an obvious choice among stocks that would benefit from a stock split. The company produces high-demand machines for which it is the only supplier globally. ASML can only produce a handful of the extreme ultraviolet (EUV) lithography machines it manufactures on an annual basis.
The result is a very valuable firm and stock that has grown rapidly this year. ASML’s EUV lithography machines are used to produce state-of-the-art semiconductors that have applications in artificial intelligence and other high-value sectors.
Due to the extreme demand, ASML shares jumped from $700 in January to above $1,000 today. Those price increases haven’t caused volume to decline but it makes sense for ASML to consider a stock split regardless: High-profile chip companies are splitting their stocks under the notion it will benefit their capital structure in the long run. ASML is a logical potential target to watch next for investors who believe in the power of stock splits.
MercadoLibre (MELI)
MercadoLibre (NASDAQ:MELI) is in my opinion one of the best combination stocks available to investors. The company is part emerging e-commerce champion, part rising fintech star. I’m not the only one who appreciates MercadoLibre as it has become one of the more popular stocks overall. In the process, share prices have ballooned to spectacular highs and currently trade for nearly $1,700. If ever there were a stock in need of a split, MercadoLibre is it.
However, the company has maintained high prices for several years. That complicates the picture and suggests that the company may not implement a stock split. Prices approached $2,000 near the height of pandemic market madness. They dropped below $700 in the aftermath of austerity measures only to rise again to dizzying heights.
As with ASML, those high prices don’t appear to be negatively affecting demand as measured by volume. That said, a stock split could prove to be the demand catalyst that MercadoLibre didn’t know it needed.
Even without a stock split, MercadoLibre stock should continue to impress based on its extremely strong fundamental growth.
Microstrategy (MSTR)
Microstrategy (NASDAQ:MSTR) stock represents a company less known for its enterprise analytics business than its Bitcoin (BTC-USD) holdings. The company has gained massive notoriety for its strong and continued investment into the leading cryptocurrency.
By March 31, MicroStrategy had purchased $7.535 billion worth of Bitcoin, which was valued at $15.22 billion overall at the time. At that point the average cost paid by the company per Bitcoin was just above $35,000. Although Bitcoin prices have since cooled to $61,000, the company is clearly still in the black.
MicroStrategy continues to accumulate more Bitcoin, recently adding an additional 11,931 BTC to its overall holdings.
The risky move seems to have paid off for the company, which is the largest corporate holder of Bitcoin overall. Share prices have been pushed well above $1,000 in 2024. Arguably, the $1,000 threshold represents a strong psychological barrier for investors. Thus, Microstrategy is another potential target for a stock split.
Deckers Outdoor (DECK)
I bet the name Deckers Outdoor (NYSE:DECK) means very little to most stock investors. Very few people would know the company until they realize that it owns Hoka and Ugg.
Many might then recognize the strength of the company as those brands are growing very fast. The company released its fourth quarter earnings report at the end of May showing sales grew by 21% during the period, reaching $959.8 million. The better-than-expected revenues led to per-share earnings of $4.95, more than $2 higher than analysts had anticipated. Sales of Hoka shoes accounted for $533 million in sales during the period, growing by 34%.
Deckers Outdoor share prices are now approaching the $1,000 threshold. The stock sat in the $250 range two short years ago.
Deckers Outdoor certainly doesn’t need to implement a stock split in order to spike demand: The strength of Hoka and Ugg are doing more than enough. However, it wouldn’t hurt to send a strong message to the market.
Eli Lilly (LLY)
Eli Lilly (NYSE:LLY) could likely reach $1 trillion in market capitalization much quicker by implementing a stock split.
The company is currently the 10th most valuable stock as measured by market cap, with a value of $811 billion. The success of weight loss drugs Mounjaro and Zepbound has catapulted Eli Lilly into rarified air: pundits now expect Eli Lilly to reach $1 trillion in market cap at some point in the near future. It’s likely Eli Lilly could reach that threshold quicker if it so chooses.
All the company has to do is to follow the lead of Nvidia, Broadcom, and others and announce a stock split. A similar 10-for-one split would give shareholders an additional nine shares for every share held and reduce prices to $90 per share.
Many investors wonder whether a pharmaceutical firm is deserving of a $1 trillion valuation. A move by Eli Lilly to assert such confidence might be exactly what is needed.
Regeneron Pharmaceuticals (REGN)
Regeneron Pharmaceuticals (NASDAQ:REGN) is another high-priced stock in the pharmaceutical sector. Currently, a share of REGN stock costs more than $1,000. While the company is nowhere near Eli Lilly in terms of market cap, both companies are potential stock split targets.
A few things pop out about Regeneron Pharmaceuticals that suggest to me that a stock split makes a lot of sense. Simple arithmetic dictates that a 10-for-1 stock split results in updated share prices of approximately $100. That’s an affordable share price that also suggests a lot of strength overall. However, the point I really want to make is that Regeneron Pharmaceuticals boasts per-share earnings of $33.86 over the trailing 12 months. Split by a factor of 10, that still results in impressive per-share earnings of $3.39.
The point here is that a lot of really strong companies develop monstrous fundamentals when successful. In the case of Regeneron Pharmaceuticals you could argue that EPS that high almost begs for a stock split.
Mettler-Toledo International (MTD)
Mettler-Toledo International (NYSE:MTD) is perhaps the least likely stock on this list to enact a stock split in the near future. The healthcare firm provides diagnostics and research instruments primarily for the laboratory setting.
The reason I believe Mettler-Toledo International is probably the least likely company to enact a stock split is simple history. Share prices have consistently stayed above $1,000 since late 2020. Furthermore, healthcare stocks often trade for multiple hundreds of dollars and $1,000 is far from unheard of.
At the same time, a company like Mettler-Toledo International could choose to enact a stock split to drive demand. It would likely grab attention if done correctly. After all, healthcare stocks aren’t exactly the flashiest investments. Point being, Mettler-Toledo International could differentiate itself through a stock split.
It too boasts strong trailing 12-month per-share earnings that could be split with the result being a remaining $3.57 EPS.
On the date of publication, Alex Sirois 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
