The AI Revolution: A New Era of Growth for Meta Platforms
The year 2024 saw a surge in stock splits, with industry giants like Walmart and Chipotle Mexican Grill leading the charge. The artificial intelligence (AI) sector was no exception, with Nvidia and Broadcom making headlines with their 10-for-1 stock splits. But what drives investors to clamor for stock splits, and which AI company is poised to be the next to make a move?
The Allure of Stock Splits
While stock splits don’t alter a company’s fundamental value, they do make the stock more accessible to a broader range of investors by lowering the per-share price. This move can also be seen as a sign of confidence from management, indicating that the stock has the potential to rise from its new lower price. It’s no wonder investors are always on the lookout for stock splits, especially when a successful company’s share price has skyrocketed.
A Prime Candidate for a Stock Split
One AI company, in particular, is ripe for a split. With a 65% surge in its stock price last year, it now trades at over $600 per share. This tech giant is the only member of the “Magnificent Seven” – the stocks that drove last year’s market gains – that has never launched a stock split. I’m talking about Meta Platforms (NASDAQ: META), the owner of social media platforms Facebook, Messenger, WhatsApp, and Instagram.
Meta’s Dominance and AI Ambitions
Meta’s social media dominance, with over 3.2 billion daily users, has propelled its revenue and profit into the billions of dollars. The company generates most of its revenue through advertising, but it has aggressively expanded into AI, making it the company’s biggest area of investment last year. CEO Mark Zuckerberg aims to develop AIs that all Meta users can rely on for various activities, and the company has developed its own large language model (LLM) and is training the latest version, Llama 4.
Why a Stock Split Makes Sense for Meta
With its stock price approaching $1,000 per share, Meta may be deterring some investors, despite its reasonable valuation. A stock split could open up the investing opportunity to a wider range of buyers, including those who don’t have access to fractional shares or can’t afford the current price. Additionally, Meta’s investment in AI positions the company for future growth, making a stock split a logical move.
A Solid Long-Term Investment Opportunity
Even if Meta doesn’t announce a stock split, the company remains a solid long-term buy-and-hold candidate for growth investors. With its dominance in social media and aggressive expansion into AI, Meta is poised for an exciting new era of growth.
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