With few exceptions, investors have had a next-big-thing trend or innovation to captivate their attention (and available cash) for more than three decades. Over the last two and a half years, the rise of artificial intelligence (AI) has served as the primary catalyst that's lifted the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite to new highs.
But AI isn't the only reason Wall Street's bull market celebrated its second anniversary in October. Investor excitement surrounding announced stock splits in influential businesses has also propelled the broader market higher.
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A stock split is an event that enables a publicly traded company to adjust its share price and outstanding share count by the same magnitude. These changes are purely cosmetic and don't result in adjustments to a company's market cap or operating performance.
While stock splits come in two varieties, they're certainly not equal in the eyes of investors. Reverse splits, which entail increasing a company's share price and reducing its share count by the same factor, are typically frowned on by investors. This type of split is usually undertaken from a position of operating weakness and is often enacted to avoid delisting from a major stock exchange.
Meanwhile, investors absolutely love public companies completing forward stock splits. This type of split aims to reduce a company's share price to make it more nominally affordable for investors who can't purchase fractional shares through their broker.
Businesses conducting forward splits almost always outpace their peers in terms of innovation and execution. Last year, more than a dozen prominent stocks, including Nvidia, Broadcom, Chipotle Mexican Grill, and Walmart, completed forward splits.
Thus far in 2025, three brand-name businesses have taken the plunge, and very soon there may be a fourth...
Stock-split stocks are beginning to take center stage in 2025
Although stock-split euphoria got off to a slow start this year, the number of industry-leading businesses announcing forward splits has picked up recently.
Things kicked off with auto parts supplier O'Reilly Automotive (NASDAQ:ORLY) announcing its largest stock split on record in mid-March: 15-for-1. If approved by the company's shareholders during O'Reilly's annual meeting on May 15, it'll take effect after the close of trading on June 9.
O'Reilly's stock has been virtually unstoppable thanks to the company's enviable share repurchase program. Following in the footsteps of rival AutoZone, O'Reilly Automotive has bought back almost $26 billion worth of its common stock since 2011 began, reducing its outstanding share count by 59.4%. Companies with steady or growing net income and a persistent buyback program tend to see their earnings per share (EPS) climb.
Automated electronic brokerage company Interactive Brokers Group (NASDAQ:IBKR) joined the party in mid-April by announcing its first-ever stock split -- 4-for-1 -- which is slated to go into effect following the close of trading on June 17.
Interactive Brokers has benefited from a lengthy period of growth for the U.S. economy and (generally) sustained optimism on Wall Street. It's seen its customer base, the amount of equity held by customers on its platform, and the number of trades completed by its accountholders all grow over the last two years. Sprinkle in higher interest rates on margin loans, and it's been a near-perfect scenario for this well-known brokerage firm.
The third brand-name business getting in on the act is industrial and construction supplies wholesale distributor Fastenal (NASDAQ:FAST). This will be Fastenal's ninth split in 38 years as a public company -- it's completing a 2-for-1 forward split after the closing bell on May 21 -- with its shares catapulting higher by almost 125,000% since its initial public offering.
Aside from its strong cyclical ties, Fastenal's supply chain integration and innovation are what stand out. The company's on-site, internet-connected FASTVend solutions help generate immediate sales and aid Fastenal in better understanding the supply chain needs and costs of its clients.
The all-important question is this: Which brand-name company will be Wall Street's next stock-split stock?
There's more to picking out the next stock split than a high share price
On the surface, there would seem to be more than enough candidates to conduct a forward split. As of the closing bell on May 8, 50 stocks ended the session with a share price of at least $500.
But there's a lot more to choosing which company is Wall Street's next stock-split stock than simply screening for a high share price.
For instance, there has to be a desire for a company's board to make its shares nominally cheaper for everyday investors. Companies like Berkshire Hathaway and NVR have demonstrated no interest in splitting their stock, while Costco Wholesale's management team feels confident that broad-based access to fractional-share purchasing offsets the need to split its stock.
The other big puzzle piece that needs to be taken into account when deciding which company is going to split next is institutional-versus-retail ownership. Institutional investors, who often deal with millions or billions of dollars in assets under management, aren't constrained by a public company having a high share price. Therefore, companies with high institutional ownership have a weak case for splitting their stock.
For example, auto parts supplier AutoZone, streaming goliath Netflix, and travel site Booking Holdings ended the May 8 session at roughly $3,675 per share, $1,144 per share, and $5,165 per share, respectively. Without fractional purchasing, some retail investors may be unable to buy these stocks.
But dig a bit deeper, and you'll find that everyday investors make up just 11.3%, 19.6%, and 9.8%, respectively, of the share ownership for AutoZone, Netflix, and Booking Holdings. There's no immediate incentive for these companies to conduct a split.
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This is Wall Street's next logical stock-split stock
However, there is one company that makes for a logical stock split candidate: social media colossus and "Magnificent Seven" member, Meta Platforms (NASDAQ:META).
Why Meta? For starters, its share price surpassed $740 in February and is still hovering around $600, as of this writing. Meta has never conducted a stock split, but nearly 28% of its outstanding shares are held by everyday investors. This notably higher percentage of retail investor ownership, in my view, moves Meta to the front of the line of stock-split candidates.
More importantly, there are foundational reasons its share price should continue to head higher, thus incenting the need to split its stock now before its nominal share price becomes burdensome on retail investors who lack access to fractional-share purchasing.
Meta's backbone is its social media assets, which include leading destinations like Facebook, Instagram, WhatsApp, Threads, and Facebook Messenger. In March, Meta's family of apps collectively attracted 3.43 billion daily active people, more than any other social media-oriented company. With a broader audience than any other platform, Meta often possesses exceptional ad-pricing power.
For the time being, advertising accounts for roughly 98% of the company's net sales and is highly profitable.
But Meta's future is also heavily reliant on the evolution of AI. CEO Mark Zuckerberg is investing aggressively in AI-accelerated data centers, which should help with everything from the company's ongoing metaverse ambitions to improving the functionality and user-targeting potential of Facebook's social media advertising platforms.
To round things out, Meta is sitting on a mountain of capital. It closed out March with north of $70 billion in cash, cash equivalents, and marketable securities, and its operations generated close to $17.6 billion in net cash during just the first three months of 2025. Zuckerberg has the luxury of slow-stepping the development of potentially game-changing innovations to ensure everything is just right when launched.
There may be plenty of stocks trading for $500 (or more) per share, but none fits the mold of Wall Street's next stock-split stock quite like Meta Platforms.
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Sean Williams has positions in Meta Platforms. The Motley Fool has positions in and recommends Berkshire Hathaway, Booking Holdings, Chipotle Mexican Grill, Costco Wholesale, Interactive Brokers Group, Meta Platforms, NVR, Netflix, Nvidia, and Walmart. The Motley Fool recommends Broadcom and recommends the following options: long January 2027 $175 calls on Interactive Brokers Group, short January 2027 $185 calls on Interactive Brokers Group, and short June 2025 $55 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.
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