ASML Holding NV: A Stock Split on the Horizon?

ASML Holding NV (ASML), a leading supplier to the semiconductor industry, has been a significant player in the market for decades. With a history of stock splits and a strong financial performance, investors are wondering if the company is planning a stock split in the near future. This article explores the potential benefits and drawbacks of ASML conducting a stock split, considering the current market conditions and the company's strategic goals.



ASML has a history of stock splits, with the most recent one occurring on October 1st, 2007, when the company split its shares 8-for-9. This means that one ASML share bought prior to May 12th, 1997 would equal to 10.666666666667 ASML shares today. This indicates a consistent trend of increasing shareholder value over time. However, it has been over 16 years since the last stock split, which is a longer period than many of its peers in the semiconductor industry.



ASML's financial performance and market position have evolved significantly in recent years. In the first nine months of 2023, the company's net sales increased by 38% year over year to over €20 billion ($22 billion), and net income grew by 52% to approximately €5.8 billion ($6.2 billion). The company's earnings per share (EPS) have also been increasing, indicating a significant improvement in profitability. ASML's market capitalization has grown substantially, reflecting investors' confidence in the company's growth prospects.

Potential Benefits of a Stock Split:

1. Increased accessibility for retail investors: With ASML's stock price currently above $650 per share, a stock split would make the shares more affordable for retail investors, potentially increasing the number of individual shareholders and enhancing liquidity.
2. Employee stock ownership: A lower share price could encourage employees to buy more shares, aligning their interests with the company's long-term success.
3. Sign of confidence: A stock split can signal management's confidence in the company's future prospects, potentially boosting investor sentiment and attracting new investors.
4. Milestone for growth: A stock split can serve as a milestone for a company's growth, resetting the share price for further growth and signaling a new chapter in the company's history.

Potential Drawbacks of a Stock Split:

1. Current market conditions: ASML's stock has been volatile and has experienced a significant decline from its peak in 2022. Conducting a stock split during this period could be seen as a desperate move to boost the stock price, potentially damaging investor confidence.
2. Potential dilution: While a stock split does not change the company's market capitalization, it can dilute the value of existing shares if the company issues new shares to raise capital.
3. Potential distraction: Focusing on a stock split could distract management from the company's core strategic goals, such as expanding production capacity and developing new EUV machines.
4. Uncertain impact on stock price: While some studies suggest that stocks tend to outperform after a stock split, there is no guarantee that ASML's stock price would benefit from a split, especially given the current market conditions and the company's recent performance.

In conclusion, while a stock split could offer some benefits to ASML, such as increased accessibility for retail investors and signaling confidence in the company's future, the current market conditions and the company's recent performance may make it an inopportune time to conduct a split. Management should carefully consider the potential drawbacks and weigh the strategic importance of a stock split against the company's core goals.