Both Apple Inc. (NASDAQ: AAPL) and Tesla Inc. (NASDAQ: TSLA) announced stock splits this month. These companies will create more shares, leaving their market capitalizations intact, but decreasing the price per share.
Splits help to keep stocks affordable and can boost trading volume. With high-demand stocks like Apple and Tesla, splits could potentially attract so much new investment that the market capitalizations increase dramatically.
With the stock market performing well, even with the ongoing recession and health crisis, other companies are now considering similar moves.
Which Companies Could Split in the Coming Months?
Popular stocks priced beyond the average investor are most likely to split in the coming months.
Amazon.com Inc. (NASDAQ: AMZN) is the most notable example. A single share trades for more than $3,100 today, which prices many individual investors out of the market. Amazon’s stock hasn’t split since 2009, and the rate of its price growth has increased in recent years. Amazon is already one of the most valuable publicly traded companies in the world, but a split now could attract even more capital from mom and pop investors.
Top analysts also believe the following companies are considering splitting their stocks for today’s bull market:
- Chipotle Mexican Grill (NYSE: CMG): Trades above $1,180 today and is up 45% over the last year.
- Netflix (NASDAQ: NFLX): Trades above $480 today and is up 59% over the last year.
- Facebook Inc. (NASDAQ: FB): Trades above $261 today and is up 42% over the last year.
- Alphabet Inc. (NASDAQ: GOOGL): Trades above $1,500 today and is up 27% over the last year.
All these stocks are popular with investors today. If any of them were to split, effectively bringing down the price per share, investment activity could increase even more.
Splitting large stocks does come with some downsides. High priced stocks are more likely to attract long-term investors, which can help to protect the share price. Affordable stocks are more likely to trade frequently, which can make prices volatile.
Overall, especially considering positive sentiment in the market, some splits on larger stocks would be positive. Investors should watch the markets closely in the coming months, as some of the stocks listed above could quickly become bargains.
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