Anticipated Stock Divides in 2025: Two Irresistible Shares Surged by 390% and 300% Over the Past Two Years, Suggests Wall Street, Advising Purchase
Anticipated Stock Divides in 2025: Two Irresistible Shares Surged by 390% and 300% Over the Past Two Years, Suggests Wall Street, Advising Purchase
A stock split can serve as a sign from a company's leadership that they anticipate the ongoing prosperity of the company's stock price. Splitting shares won't alter the fundamental aspects of the underlying enterprise, but it can make the stock price easier to manage for matters like equity compensation and options trading. For investors who follow a buy-and-hold strategy, a stock split can occasionally generate significant interest in a particular stock, potentially triggering a surge in price.
Investors might reap significant benefits by identifying prospective stock-split candidates. Purchasing shares prior to a company's announcement of a split allows investors to capitalize on the boost in interest that results from the announcement. However, it's equally crucial that the company exhibits solid financial performance and has the potential to continue rising in value, whether or not its shares are split.
Such possibilities are presented by both Facebook parent company Meta Platforms (META -0.90%) and Netflix (NFLX -0.64%) following their respective increases of 390% and 300% since the market's low on Oct. 12, 2022. Both companies have nominal share prices that could potentially lead to a stock split by 2025, and analysts continue to predict positive developments for either.
1. Meta Platforms: Increased by 390% since October 2022
Meta's success since 2022 is attributable to strategic decision-making by its management. CEO Mark Zuckerberg declared 2023 as the "year of efficiency" for his company. His aim was to reduce expenses wherever feasible and focus strongly on aspects that could significantly impact Meta.
The outcome was a 62% increase in operating earnings in 2023 and a 52% rise through the first nine months of 2024, despite a substantial boost in AI spending.
Artificial intelligence forms the core of Meta's operations. It employs machine learning algorithms to determine the optimal content for users at any given moment, fueling robust engagement and high advertisement conversion rates (resulting in high ad prices). Advancements in large language models led Meta to revamp its recommendation engine successfully.
The development of generative AI could result in more user-generated content, increased interaction between businesses and customers on its messaging platforms, and extensive testing of ads across all its properties by advertisers. Zuckerberg views generative AI as having the potential to fundamentally transform the business. One day, he says, a company will simply inform Meta of its advertising goal and budget, and AI will handle the rest.
As of now, Meta's stock is priced at $620. A stock split could restore the nominal price within the range of other high-performing tech stocks that underwent splits in recent years. Meanwhile, the median price target on Wall Street is $660 per share, indicating a mere 6% additional potential growth from this point. However, the current stock price is less than 25 times analysts' anticipated 2025 earnings, which is a fantastic bargain compared to most other prominent AI stocks. Analysts may need to reassess their price targets, not only because of a potential stock split next year but also due to potential positive developments in the company.
2. Netflix: Soared by 300% since October 2022
Netflix's growth over the past two years was fueled by two major transformations at the streaming pioneer.
Firstly, the company introduced an advertisement-supported tier in late 2022. Since then, it has drawn in 70 million viewers to the affordable plan. This has contributed to the resurgence of its subscriber growth, which increased by 27% over the previous two years. Advertising has also opened up additional content opportunities for Netflix, including live events and sports.
At its current scale, Netflix has become an attractive platform for advertisers. It launched its own advertising technology in select markets earlier this year and plans to expand it to all of its ad markets in 2024. As the advertising business grows, so does potential monetization, without the need for continuously raising subscription prices.
Secondly, Netflix tackled password sharing. With the availability of the ad-supported tier, Netflix decided to no longer tolerate users sharing accounts across households. While it experienced a brief period of disruption, it ultimately resulted in a significant increase in subscription revenue.
Though the password-sharing crackdown's impact is temporary, Netflix still retains growth opportunities in international markets. It should also be able to enhance revenue per membership in established markets through better monetization of advertisements and higher prices for ad-free subscriptions.
As of this writing, Netflix's stock is priced at approximately $920 per share. This is above its stock price from its last split in 2015 ($700 per share), indicating that a stock split may not be imminent. Analysts generally have a positive outlook on the stock, with an average buy rating, and JPMorgan analysts recently set a $1,010 price target for the stock, suggesting a 9% potential growth over the next year.
Netflix's stock valuation has increased substantially over the past two years, with its price now trading at 46 times projected forward earnings. However, with a great deal of operating leverage in the business, it could continue to demonstrate strong earnings growth for several years. The stock represented a fantastic opportunity for investors when it traded at a much higher multiple in the 2010s during a significant transition period for the company. It could repeat history as it transitions more of its revenue to advertising over the next decade.
- Considering Meta Platforms' impressive 390% growth since October 2022, some investors might find investing in the company attractive, especially if they anticipate a future stock split. This could make the shares more affordable, aligning the stock price with other high-performing tech stocks that have undergone splits in recent years.
- Netflix's stock soared by 300% since October 2022, and while a split isn't immediately necessary due to its already relatively high price, the company's strong financial performance and potential for further growth could make it an interesting opportunity for those who are able to invest in finance and are keeping an eye on future stock splits.