Tesla & Apple Surge With Stock Split Announcement. Are Amazon, Chipotle & Google Next?

by Trefis Team
Rate   |   votes   |   Share

Large-cap stock splits are back with Apple and Tesla slated to split their shares on August 31. Although splits don’t change the fundamentals of a company, they often cause a run-up in the stock price post announcement. These stocks also tend to outperform in the years following the split for two reasons. Firstly, they make stocks more accessible to smaller investors, driving up demand for the shares. Secondly, they indicate that management is confident about the company’s future prospects and that growth could remain strong. For example, Apple stock is up by almost 10% since it announced its split in late July, while Tesla is up a whopping 35% since its split announcement on August 11. Apple’s market cap is up over 3x since its last split in 2014.

Now which other stocks on the S&P 500 could be candidates for splits? We believe Amazon (NASDAQ:AMZN), Intuitive Surgical(NASDAQ: ISRG), Alphabet (NASDAQ:GOOG)  (the parent company of Google), Chipotle (NYSE:CMG), and Sherwin-Williams (NYSE:SHW) could be some of the prime candidates for stock splits in the near-term. Why? All these stocks trade at over $500, making them relatively inaccessible to small investors. They’ve also seen Revenue grow by at least 30% between 2016 and 2019, an indicator that demand for products and services is increasing and should remain strong going forward. Additionally, these companies have seen their stock price rise by at least 50% since early 2017, indicating that investors are acknowledging the company’s potential.

See our indicative theme on S&P 500 Stocks That Look Ready For A Split for more details on the complete list of companies poised for a split, with historical financial and stock price performance.

Amazon, which saw its last split about two decades ago currently trades at over $3,200. The stock is up by over 70% year-to-date, as the Covid-19 pandemic caused demand for its e-commerce and cloud services business to surge.

Google carried out its only stock split in 2014 and the stock currently trades at over $1,500. The company has outperformed since 2014, with its market cap up an annualized 16% and revenues also growing 2.5x.

Intuitive Surgical which carried out its last split in 2017, is trading near all-time highs of about $690. The company has been seeing growing adoption of its da Vinci system for robotic surgeries given its advantages that include shorter hospital stays and faster recoveries compared to traditional open surgery.

Chipotle Mexican Grill stock trades at over $1,200 presently and the company hasn’t done any splits to date. The company has been gaining an edge over rivals, driven by its higher-quality ingredients compared to fast-casual peers, improving brand value, and efficient restaurant-level operations.

Sherwin-Williams, a paint and coating manufacturer trades at over $650 per share presently. The company, which saw its last stock split in 1997, is witnessing growing demand from the retail sector as consumers spend more on home improvement projects.

See all Trefis Price Estimates and Download Trefis Data here

What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs For CFOs and Finance Teams | Product, R&D, and Marketing Teams

Rate   |   votes   |   Share


Name (Required)
Email (Required, but never displayed)
Be the first to comment!