Companies split stocks because their share prices are rising and are expected to continue rising to levels that make ownership difficult for large market portions, including their employees. Their stock prices rise because the businesses are fundamentally healthy, either growing robustly or driving cash flow to sustain capital return. They are expected to continue rising because of unmet demand; investors want more.
Regarding ownership, it is the employees that stock splits are intended to help most. Companies like Broadcom (NASDAQ: AVGO), Casey’s General Stores (NASDAQ: CASY), and Costco (NASDAQ: COST) utilize several options that allow their employees to buy stock such as ESPPs, RSUs, and stock options. However, with shares trading at nearly $250, $400, and nearly $1000, respectively, it is difficult for employees to buy shares and not disrupt family budgets or be problematic for the business. In that scenario, the company can make buying shares easier for its employees and the entire market without hurting budgets, investment goals, or portfolio allocation by initiating a stock split.
