2 Magnificent Companies That Can Kick Off 2025 With a Historic Stock-Split Announcement

As we approach the end of 2024, investors are eagerly anticipating the next big catalysts that could drive the market higher. While better-than-expected corporate earnings, Donald Trump's November victory, and the artificial intelligence (AI) revolution have already contributed to record highs for the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite, there's another factor that could add fuel to the fire: stock-split euphoria. In this article, we'll explore two magnificent companies that could kick off 2025 with a historic stock-split announcement: Meta Platforms (META) and Netflix (NFLX).



Meta Platforms, the parent company of Facebook, Instagram, WhatsApp, and other popular social media platforms, has seen its stock price soar in recent weeks, surpassing $600 per share on numerous occasions. While the company's high institutional ownership (72%) may not require a lower share price to attract more investors, a stock split could still generate excitement and attract retail investors who lack access to fractional shares. With a strong cash flow and cash-rich balance sheet, Meta is well-positioned to invest aggressively in future growth initiatives, such as AI and the metaverse. A stock split could signal to the market that Meta's management is confident in the company's future prospects and boost investor sentiment.



Netflix, the popular streaming service and a member of the FAANG stocks, has also seen its stock price remain consistently high. The last time Netflix split its stock was in 2020, and a new split could have a similar positive impact on investor sentiment and stock performance. As Netflix continues to invest in original content and expand its global reach, a stock split could make the stock more affordable for individual investors and attract more retail investors.



Forward stock splits have historically outperformed, with companies completing this type of split delivering an average return of 25.4% in the 12 months following their announcements since 1980. By comparison, the S&P 500 averaged a more modest 11.9% annual return during these same timelines. In 2024, more than a dozen prominent businesses completed a stock split, and all but one was of the forward variety. This trend suggests that forward stock splits can have a positive impact on investor sentiment and stock performance.

In conclusion, Meta Platforms and Netflix are strong candidates for a stock split in 2025, given their high stock prices, strong financial performance, and potential for increased retail investor interest. While there are potential drawbacks, such as dilution and short-term price impact, the historical performance of stock-split stocks and the positive impact on investor sentiment make a compelling case for these two magnificent companies to kick off 2025 with a historic stock-split announcement. As always, investors should carefully consider these factors and stay informed about market trends and company-specific news when making investment decisions.