3 Stocks That Need to Split
In commemoration of NVIDIA’s (NASDAQ:NVDA) recent 4 for 1 stock split, it’s time to scan the markets for some other candidates.
Mike Sakuraba graduated with double major of English and Economics. Part time writer, part time investor, full time dad. Mike loves writing about technology, sports, and investing.
2021-07-24 11:34

Last year, Apple ($173.07|0.51%) and Tesla ($1049.61|1.75%) both executed stock splits and saw a tremendous bull run into the split date, as investors tried to get their hands on as many shares of these valuable companies as possible. But that’s not really how it works, right?

Mathematically speaking, a stock split does nothing to alter the value of a stock or company. As the saying goes: there are just more slices of the same pizza. But you also cannot deny the psychological impact a stock split has on the minds of investors, particularly retail investors. Aside from buying fractional shares, a high share price can be daunting and dissuade people from even trying to invest in the company. For advanced traders, a cheaper share price means you can buy more shares, which can come in handy if you like to make premiums by selling covered calls. No matter how you spin it, the markets get excited for stock splits, so let’s take a look at three companies that are long overdue for one.

Amazon ($3242.76|0.57%): This is probably the one stock that first pops in everyone’s mind when we talk about stock splits. At its current price of just over $3,600.00 per share, Amazon is one of the most expensive stocks on the market. Many believed it was former CEO and current Executive Chairman Jeff Bezos who was against a stock split. This led to rumors that new CEO Andy Jassy would be more inclined to allow one. It seems as though Amazon is perfectly fine keeping its share price higher, so don’t expect a stock split anytime soon.

Shopify (NYSE:SHOP): On the Toronto Stock Exchange, Shopify’s Canadian stock just hit $2,000 CAD per share for the first time in its history. The U.S. version of the stock is just as pricey at almost $1,600 USD per share. Shopify was a wonderful story a few years ago when the stock was returning exponential gains to those who were lucky enough to get in early. Now, shares are trading at a premium, and with a relatively low share float of only 112 million, the company can execute a split without worrying about too much dilution. Will it happen? There’s been no sign of it so far, and Shopify seems to be heading down the path of Amazon, where investors will always regret calling the stock too expensive. 

MercadoLibre (NASDAQ:MELI): I could have gone with a stock like Alphabet ($2789.61|0.65%), but instead I chose MercadoLibre. Latin America’s largest eCommerce and digital payments company, MercadoLibre has been a very popular stock that has provided investors with many multi-bagged returns. Why is MercadoLibre so expensive? First, it has an extremely low share float with only 49 million shares outstanding. Second, it may seem expensive, but with a market cap of nearly $80 billion, the stock trades at a very reasonable price to sales ratio of 16.9. This is incredibly low for a high growth stock, especially compared to peers like Sea Limited (NYSE:SEA) which trades at a multiple of 28, and the aforementioned Shopify which trades at a multiple of 57. I would love to see MercadoLibre split its stock, because I think the company can return to these levels again in the future, especially given the cheap multiples that it currently trades at.

Disclaimer: I have no positions in any of the stocks mentioned. I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article. All information should be independently verified and should not be relied upon for purposes of transacting securities or other investments. See terms for more info.

Published On
2021-07-24 11:34

About the Author
Mike Sakuraba graduated with double major of English and Economics. Part time writer, part time investor, full time dad. Mike loves writing about technology, sports, and investing.

$18.48 0.57%
Perf. YTD -2.17%
52W high -14.06%
52W low 12.56%
PE Ratio 63.43
MKT Cap 1.64T

Analyst Ratings
Target Price $4108.8
# of Analysts 51
Last updated 2022-01-15

Nio Smashes Delivery Records and is Poised to Rebound
Nio reported its December, fourth quarter, and full-year delivery figures over the weekend, and suffice to say, Wall Street was impressed.
By Mike Sakuraba | 1 week ago

Tilray; capturing the cannabis market with another acquisition
With the acquisition of Breckenridge Distillery, Tilray is undergoing a horizontal expansion to increase its offering in the beverage alcohol sector.
By Precious Njoku | 2 weeks ago

Why You Should Buy the Tesla Shares that Elon Sold
As much as analysts say that Tesla’s stock is inflated and that the EV market is catching up to the company, we cannot deny that the stock is resilient.
By Mike Sakuraba | 2 weeks ago

Why Tesla Rebounded but Lucid, RIvian, and Nio did not
Now that Musk is finished for this year, investors seemed to take that as a bullish sign.
By Mike Sakuraba | 3 weeks ago

Why I Was Wrong About AliBaba
AliBaba’s business and stock are heading in opposite directions, but one day soon we will find a capitulation.
By Mike Sakuraba | 3 weeks ago

Why Nio is in Freefall: Is it time to sell Nio?
Nio investors are no doubt feeling some deja vu after the stock tumbled into the low single digits in the winter of 2019.
By Mike Sakuraba | 4 weeks ago

Breaking into the Cannabis industry with strength
The company recently announced annual revenue of $2.9 billion, with an adjusted earning per share of $12.46.
By Precious Njoku | 4 weeks ago