Stock splits have again captured investor attention as 2024 unfolds with a flurry of corporate actions to make shares more accessible. While there isn’t a single “magic” share set to split this year, a growing list of companies—from technology giants to retail powerhouses—are embracing this strategy.
In this article, we examine the trends behind stock splits in 2024, spotlight some of the top candidates, and explore the potential benefits for investors.
The Rising Trend of Stock Splits in 2024
Over the past several months, market data has shown that both forward and reverse stock splits are rising. Companies are increasingly using splits to adjust their share price, enhance liquidity, and appeal to a broader base of retail investors. This surge is partly driven by the renewed interest of retail investors and the desire by corporate boards to keep their stocks in an “attractive” price range.
Recent data from market research platforms and financial news outlets indicate that the first half of 2024 has seen split announcements reach record numbers—a trend that is expected to continue into the final quarter of the year. In particular, traditional splits (which increase the number of shares held by investors) tend to be viewed positively by the market, as they lower the per-share price without changing the overall market capitalization.
Top Stock Split Candidates
While several companies have already executed splits in 2024, some of the most noteworthy upcoming splits include:
Arista Networks
Arista Networks has recently announced a four-for-one stock split scheduled for early December 2024. This move is designed to make the company’s shares more affordable for new investors while increasing liquidity in the market. Despite recent earnings challenges and margin adjustments, Arista’s decision to split its stock reflects confidence in its long-term growth potential.
Palo Alto Networks
Cybersecurity leader Palo Alto Networks is set to follow a similar path with a two-for-one stock split announced for mid-December 2024. The company’s move is expected to broaden its investor base by lowering the individual share price, thus making it accessible to a larger number of retail investors. Strong quarterly performance and an optimistic revenue forecast have bolstered market sentiment around this strategic decision.
Other Notable Mentions
In addition to Arista and Palo Alto, other companies such as Nvidia, Broadcom, and even some retail giants like Walmart have executed splits earlier in 2024, setting the stage for further actions later this year. There is also ongoing speculation that established consumer brands—Costco, for instance—could consider a split given their high per-share prices and the current trend among peers.
Why Do Companies Split Their Shares?
Stock splits do not change a company’s overall market capitalization. Instead, they increase the number of shares outstanding while reducing the price per share proportionately. Here are some key reasons companies choose to split their stock:
- Enhanced Affordability: By lowering the per-share price, splits make stocks more accessible to retail investors.
- Improved Liquidity: More shares in circulation typically lead to tighter bid-ask spreads and a higher trading volume.
- Psychological Appeal: A lower share price can create a perception of greater value or “buying opportunity,” encouraging more investor participation.
- Broadening the Shareholder Base: Splits help companies attract a more diverse mix of investors, which can be beneficial for long-term stability.
FAQs For Which Share Will Split in 2024?
Q1. What is a stock split?
A stock split occurs when a company divides its existing shares into multiple new shares. Although the number of shares increases, the overall market capitalization remains unchanged. For example, in a 2-for-1 split, an investor holding 100 shares would now hold 200 shares, each priced at half the original price.
Q2. What is the difference between a forward split and a reverse split?
A forward split increases the number of shares while lowering the price per share (e.g., 4-for-1), making the stock more affordable. In contrast, a reverse split reduces the number of shares and increases the price per share, often used by companies seeking to avoid delisting or to boost their share price.
Q3. Why are companies opting for stock splits in 2024?
Many companies see splits as a way to attract retail investors by making shares more accessible. With heightened market participation from retail traders and a desire to improve liquidity, stock splits have become a popular tool for aligning share prices with investor sentiment.
Q4. Will a stock split affect the value of my investment?
No, the overall value of your investment remains the same immediately after a split. Although the number of shares increases and the price per share decreases proportionately, your total investment’s market value remains unchanged—barring any subsequent market movements.
Q5. How do I know if a company is planning a stock split?
Companies usually announce stock splits through press releases and filings with regulatory bodies. Financial news outlets and dedicated stock split calendars on platforms like Yahoo Finance, Nasdaq, and MarketBeat provide up-to-date information on upcoming splits.
Conclusion
The question “Which share will split in 2024?” does not have a single answer. Instead, 2024 is witnessing a dynamic mix of stock splits across various industries—from tech innovators like Arista Networks and Palo Alto Networks to retail giants that have already split their shares earlier in the year. These strategic moves are aimed at enhancing liquidity, attracting retail investors, and making shares more accessible.
As the year progresses, investors should monitor official announcements and financial news to stay updated on these corporate actions and understand their potential impact on investment strategies.
Whether you’re a seasoned investor or new to the market, understanding the rationale behind stock splits can help you make more informed decisions. Stay tuned to trusted financial sources and keep a close eye on market trends for the best opportunities in 2024.