Stock splits have regained popularity in recent years, thanks to the introduction of low- and no-cost trading and the option to buy fractional shares. However, some stocks now trade for over $1,000 per share, making them less accessible to smaller investors.
In 2022, several high-profile companies split their shares to make them more affordable for retail investors:
- Amazon implemented a 20-for-1 split in June 2022.
- DexCom decreed a 4-for-1 split in June 2022.
- Shopify enacted a 10-for-1 split in June 2022.
- Alphabet completed a 20-for-1 split in July 2022.
- Tesla finished a 3-for-1 split in August 2022.
- Palo Alto Networks executed a 3-for-1 split in September 2022.
Although stock splits do not affect a company’s underlying value, they make shares more affordable and accessible for retail investors. Here are three stocks that could potentially split their shares in the near future:
MercadoLibre (NASDAQ: MELI) is the leading e-commerce and digital payment services provider in Latin America. The company had a strong performance in 2022, with revenue increasing by 49% and net income soaring by 481%. So far in 2023, revenue has jumped 33% and net income has increased by 146%. Over the past decade, revenue has surged 2,680% and net income is up 795%. With its stock price recently reaching $1,423, MercadoLibre could be a prime candidate for a stock split.
2. Booking Holdings
Booking Holdings (NASDAQ: BKNG) is well-positioned to benefit from the recovery in the travel industry. The company owns multiple consumer-facing brands, including Priceline, Agoda, Rentalcars.com, and Booking.com. In the second quarter of 2023, Booking Holdings saw strong growth in room nights booked and gross bookings. Revenue increased by 27% year over year, while net income soared by 51%. With its stock price recently reaching $3,182, Booking Holdings could be a potential candidate for a stock split.
3. Chipotle Mexican Grill
Chipotle Mexican Grill (NYSE: CMG) has shown resilience in the face of economic challenges. The company’s digital channel and loyalty program, Chipotle Rewards, have been major drivers of growth. In the second quarter of 2023, Chipotle saw a 38% increase in digital sales and a 16% increase in in-restaurant sales. Over the past decade, the company has experienced revenue growth of 204% and net income growth of 309%. With its stock price recently reaching around $1,922, Chipotle could be a potential candidate for a stock split.
While these stocks have performed well in the past, they currently have high valuations. Chipotle, Booking Holdings, and MercadoLibre are trading at price-to-sales ratios of 5 times, 5 times, and 4 times, respectively. However, given their strong track records and history of performance, they may deserve slight premiums.
*Stock Advisor returns as of September 11, 2023
Disclosure: The author has positions in Alphabet, Amazon.com, Booking Holdings, Chipotle Mexican Grill, MercadoLibre, Shopify, and Tesla. The Motley Fool has positions in Alphabet, Amazon.com, Booking Holdings, Chipotle Mexican Grill, MercadoLibre, Palo Alto Networks, Shopify, and Tesla. The Motley Fool recommends DexCom. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.