In recent years, stock splits have become more prevalent among tech companies, despite their surface-level impact on a stock’s overall value. While the value of an investment remains the same, whether it’s 100 shares at $100 each or 200 shares at $50 each, high nominal share prices like those seen with Berkshire Hathaway can reduce liquidity and complicate investment for smaller shareholders who prefer whole shares.
Furthermore, many stocks have experienced significant growth after previous stock splits, leading to speculation about the possibility of future splits. Among the stocks worth considering for potential stock splits are Microsoft (NASDAQ: MSFT), Adobe (NASDAQ: ADBE), and Booking Holdings (NASDAQ: BKNG).
ALSO READ: Avoid These 4 Early Retirement Pitfalls or Regret Forever!
Microsoft, which hasn’t split its shares in over two decades, may be overdue for a stock split. With a current stock price exceeding $325, the cost of purchasing even a single Microsoft share can be burdensome for many investors. The last split occurred as a 2-for-1 split in February 2003, and since then, Microsoft’s shares have surged by more than 2,000%. Fundamentally, Microsoft remains strong, with its most recent quarterly results showing impressive figures, such as $56.5 billion in revenue (a 13% YoY increase) and $2.99 in earnings per share (a 27% YoY increase).
Adobe is no stranger to stock splits, having undergone six since its founding in the 1980s. Although stock splits don’t alter a stock’s intrinsic value, they make share prices more accessible to individual investors. Adobe’s consistent growth has driven its share price beyond $500, potentially making it unaffordable for many. The company continues to deliver strong financial results, with record revenue and more than 20% YoY growth in earnings per share. Analysts predict a 13% annual increase in EPS over the next three to five years, suggesting that another stock split may be on the horizon.
ALSO READ: Wall Street’s Hidden Gems: Two Explosive Growth Stocks Set to Skyrocket!
Booking Holdings has a unique stock split history, beginning with a 1-for-6 reverse split in 2003. This strategy worked so well that the stock price surpassed $1,000 per share by 2013 and now stands at over $2,800 per share. With a 40% increase in its stock price this year and a 15% CAGR projected for the online travel industry through 2030, it is likely that Booking Holdings’ stock price will continue to rise. Its financials also support this growth, with a 32% increase in revenue to $9.2 billion in the first half of 2023 and a substantial rise in net income. To attract more investors and support further price appreciation, Booking Holdings may consider a stock split in the future.
