While stock splits are far from easy to predict, two names stand out for their potential to do so going forward. Those stocks are Meta Platforms (NASDAQ: META) and Eli Lilly and Company (NYSE: LLY). The basic rationale for a company performing a stock split is simple: it lowers the price of each share, making the stock more accessible for retail investors. It is important to understand that stock splits do not, in and of themselves, change the overall value of a company. But the potential for increased retail demand can benefit a company’s share price.
However, researchers disagree on whether stock splits are actually beneficial. This paper from 2024 indicates that unusual returns surrounding stock split announcements and in the following quarters are “significantly positive." Although other research indicates that stock splits are simply cosmetic and don’t result in a clear positive trend. Despite this, stock splits are events that are of interest to many investors. The reality remains that exorbitantly high share prices can still create a barrier to retail investors purchasing shares.
