This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
Shares of Meta Platforms (NASDAQ: META) have soared 443% over the past three years, closing at $661.50 on Dec. 22. At this share price, Meta now trades in the same range where companies such as Apple, Nvidia, and Tesla previously announced forward stock splits.
While Meta has never executed a forward stock split since going public, the company's rising share price and growing earnings power have meaningfully increased the probability of a split in 2026.
Stock splits don't change the value of any investor's holdings, but here's why a Meta stock split could prove beneficial for investors, if it were to enact one.
Upside drivers
Although stock splits do not change a company's fundamentals, they tend to improve liquidity and broaden the investor base as they lower the per-share price (while increasing the number of shares), which can support higher trading activity and market valuation over time. While the availability of fractional shares has reduced some barriers to entry in stocks with high nominal share prices, research suggests that many retail investors still prefer owning full shares.
According to data from Bank of America's Research Investment Committee, companies that split their stock reported an average total return of 25.4% in the 12 months following the split announcement, more than double the 11.9% average return of the benchmark S&P 500 index in the same time frame. Hence, Meta's stock could see an incremental upside from improved liquidity and broader participation following a stock split.
Meta reaches almost 3.5 billion people daily across its family of apps, giving it unmatched global scale and pricing power in digital advertising. Management has also guided for fiscal 2025 capital expenditures to be in the range of $66 billion to $72 billion, mainly for expanding its artificial intelligence (AI) infrastructure.
These investments are already showing results. Meta's AI-driven ad tools are improving ad targeting efficiency and advertiser returns on ad spend. The company is also expanding its addressable market with newer ad surfaces, including on WhatsApp, Reels, and Threads.
Hence, for long-term investors, a potential stock split could serve as an accelerator on top of the company's robust fundamentals, which can drive up its share prices in the coming months. I think Meta could be a stock-split stock that could make investors rich.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
