Stock splits trade existing shares for more shares at a lower per-share price without changing overall market value, often enhancing retail appeal and prompting positive market reactions. Reverse splits reduce share counts and typically occur when fundamentals deteriorate. Forward splits follow sustained appreciation and signal board-level confidence. AI-related stocks paused split activity amid spring tariff concerns that slowed momentum, but the AI rally has since resumed. Meta Platforms stands out as a likely candidate, trading above $750 and potentially exceeding $1,000 if current momentum continues, making a forward split increasingly plausible.
Stock splits are the corporate equivalent of exchanging a crisp twenty-dollar bill for twenty singles. Nothing about the underlying value changes, but the gesture can change perception. It makes the stock much more appetizing to retail investors, and this alone causes stock split announcements to be rewarded by the market. This is not true for the reverse variety, which shrinks the share count and lifts the price.
Reverse splits are usually an act of triage, meant to keep a listing alive when fundamentals have deteriorated. Forward splits, by contrast, are a victory lap. They arrive only after sustained appreciation and are therefore viewed as a vote of confidence from the boardroom. There were several high-profile stock splits last year, but so far this year, there haven't been many to speak of. I blame this on the tariff spook this spring, which caused AI momentum to take a breather.
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