Two Nasdaq-100 companies have already announced stock splits this year, with Nvidia and Broadcom leading the way with significant share price increases. Nvidia’s shares are up 760% since the beginning of 2023, while Broadcom’s shares have risen by 205% over the same period. Nvidia has already completed a 10 for 1 stock split, and Broadcom is set to follow suit on July 12.
Before the split, Nvidia was the fourth most expensive stock in the Nasdaq 100, while Broadcom currently holds the third spot. The purpose of a stock split is to reduce the price of the stock, making it more accessible and liquid for investors. The next likely candidate for a split is MercadoLibre, which is currently the highest-priced stock in the index after Booking Holdings, whose CEO opposes the idea of a split.
Despite the potential for a stock split, MercadoLibre remains a promising long-term investment opportunity. As the market leader in e-commerce and retail advertising in Latin America, MercadoLibre operates the largest online commerce and payments ecosystem in the region. Its marketplace boasts significantly higher visitor traffic than its competitors and is expected to capture 29% of domestic online retail sales this year.
In addition to e-commerce, MercadoLibre has diversified its offerings to include financial services, logistics support, and advertising tools. The company reported strong financial results for the first quarter, with revenue increasing by 36% and GAAP net income rising by 71%. The growth in both commerce and fintech segments demonstrates MercadoLibre’s ability to effectively monetize merchants on its platform.
Furthermore, MercadoLibre is projected to be the fastest-growing ad tech company globally by 2024, as the digital economy in Latin America is expected to expand by 23% annually over the next three years. Despite risks such as hyperinflation in Argentina impacting domestic sales, Wall Street remains optimistic about MercadoLibre’s future earnings growth.
Investors should be aware of the stock’s historical volatility, with a three-year beta of 1.59 indicating significant movement in response to market fluctuations. However, those comfortable with the risk and volatility may consider purchasing a small position in MercadoLibre, as it presents a compelling opportunity for growth in the e-commerce and fintech sectors.
Disclaimer: Trevor Jennewine of The Motley Fool holds positions in MercadoLibre and Nvidia. The Motley Fool recommends Booking Holdings, MercadoLibre, and Nvidia. Investors should conduct their research before making any investment decisions.
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https://www.fool.com/investing/2024/07/07/nvidia-broadcom-stock-split-nasdaq-100-stock-next/
