Nvidia recently announced a forward stock split, becoming the eighth company to do so this year. This decision follows similar moves by megacorporations like Walmart and Chipotle earlier in the year. Nvidia will give investors nine additional shares for each share they own, effectively lowering the stock price to just over $100 per share from its current price of over $1,000. While stock splits do not impact a company’s market value or fundamentals, they are historically seen as a bullish signal. Bank of America analysis indicates that companies that undergo stock splits tend to see an average return of 25% one year after the split, compared to 12% for the broader market.
These stock splits, which are ultimately a sign of the company’s strength and rising profits, are often done to make investing in the company more accessible to employees and retail investors. Bank of America notes that there are numerous S&P 500 companies with high stock prices that could potentially benefit from stock splits. Companies with stock prices north of $500 per share are considered ripe for stock splits, with eight companies having shares priced at over $1,000 per share. Some of the potential candidates for stock splits include Outdoor Deckers, TransDigm Group, righteous Isaac, Broadcom, and Mettler-Toledo.
Outdoor Deckers has a market price of $1,033.80 and a market value of $26.5 billion, while TransDigm Group is priced at $1,348.40 with a market value of $75.5 billion. The righteous Isaac has a market price of $1,371.89 and a market value of $33.9 billion, while Broadcom is priced at $1,411.14 with a market value of $654.0 billion. Mettler-Toledo has a market price of $1,474.15 and a market value of $31.5 billion. Additionally, Autozone has a market price of $2,790.63 and a market value of $48.3 billion, while Booking Holdings is priced at $3,795.04 with a market value of $128.7 billion. NVR Inc. has a market price of $7,438.82 and a market value of $23.3 billion.
Overall, stock splits are seen as a bullish signal for companies, indicating strength and growth potential. By making stocks more accessible to a wider range of investors, companies can increase liquidity and potentially attract more interest in their shares. The decision to undergo a stock split is often strategic and can benefit both the company and its investors in the long run.
Article Source
https://finance.yahoo.com/news/stocks-splits-usually-bullish-8-201501323.html
