Bank of America has highlighted several stocks poised for potential splits, with Meta Platforms and Netflix topping the list. To qualify for this exclusive list, stocks must maintain a share price exceeding $500. Notably, these stocks have demonstrated superior historical returns over a one-to-five-year period compared to those that have undergone splits.
Meta Platforms has experienced a remarkable 53% increase in stock value over the past year, while Netflix continues to impress with strong quarterly results and a substantial user base of 300 million paid memberships. Analysts predict further growth, with FactSet estimating an 8% upside for Netflix and a 7% rise for Meta stock.
The concept of a stock split, which effectively reduces the share price while increasing the total number of outstanding shares without affecting shareholder equity, has gained traction lately. Companies are initiating stock splits at a pace not seen in over a decade.
Jared Woodard of Bank of America Securities emphasized the significance of this trend:
"I think stock splits in some ways are kind of a triumph for democracy, because they make a successful company available to a broader base of shareholders," – Jared Woodard of Bank of America Securities.
Meta Platforms, with its current stock price of $700.49 as of Tuesday, exemplifies the caliber of companies on Bank of America's list. The firm's remarkable performance underscores its potential for a future stock split.
Netflix's recent quarterly performance, marked by surpassing expectations on both revenue and profit margins, further solidifies its position as a candidate for a stock split. The company's expansive subscriber base, coupled with optimistic analyst projections, reinforces its growth trajectory.
A key factor driving this trend is the democratization of stock ownership. By making shares more accessible to a wider audience, companies can attract a diverse group of investors and enhance market participation.