Stock splits do not create intrinsic value but often attract significant retail investor attention by lowering the per-share price and increasing accessibility. Lower share prices can entice small investors to buy a few shares and produce temporary price boosts, yet the underlying business performance drives long-term returns. Meta Platforms trades at a modest trailing P/E of 25.5 while aggressively investing in AI talent, which could support further appreciation. Rising share prices toward Wall Street targets near $1,100 would likely increase the probability of a stock split within the next two years, improving affordability for new investors.
"Stock splits don't create any value whatsoever, but when they are announced, they tend to attract considerable attention from retail investors. Indeed, more accessibility for everyday investors is a good thing, and while lower share prices may entice some to pick up a few shares, giving them a bit of a temporary jolt, it's vital that investors don't lose sight of what really matters: intrinsic value."
"Indeed, it doesn't matter how many times you cut a share price; it's the business itself that matters most. In any case, if you're a retail investor who has always wished you could buy a stock like Meta Platforms ( NASDAQ:META) without having to put up just north of $700 for a single share, stock splits can be a huge piece of news, especially if a split happens at a good time."
Read at 24/7 Wall St.
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