With a YTD gain of nearly 32%, Meta Platforms (META) is the best-performing FAANG stock of 2024. It is among the top five S&P 500 Index ($SPX) stocks, as well, and has resumed its rally right from where it left off last year.
The price action of FAANG stocks overall hasn't changed much from 2023. While Meta is the top performer after almost tripling last year, Apple is the worst performer of the group - just as it was last year.
There were a flurry of stock-split announcements between 2020 and early 2022 as tech giants - including Apple (AAPL), Nvidia (NVDA), Amazon (AMZN), Alphabet (GOOG), and Tesla (TSLA) all split their shares. In fact, Tesla stock split twice over that period following rallies of 740% and 50%, respectively, in 2020 and 2021.
On the other hand, 2022 was a terrible year for tech giants, and there weren’t any major stock splits last year. However, as tech stocks - and especially the closely watched "Magnificent 7" - rebounded last year, investors are now once again speculating on the chances of a mega-cap stock split.
Will Meta stock split in 2024 as it scales new highs? We'll discuss in this article.
Meta Platforms Stock Scales New Highs After Q4 Earnings
Meta reported an impressive set of numbers for Q4. The company’s revenues rose 25%, which was the highest rate of growth since mid-2021. Its net income also more than tripled, thanks to the “year of efficiency” and aggressive belt-tightening. The cherry on top was the company's Q1 revenue guidance of $34.5 billion to $37 billion, well ahead of the $33.8 billion that analysts expected.
Meta also set a new Wall Street record, after the stock's post-earnings rally fueled a $196 billion rise in its market cap – a first for any U.S. company.
The company has been able to navigate the macro headwinds much better than Alphabet, which is still trying to shrug off perceptions that it's playing catchup in the artificial intelligence (AI) space.
Meta’s market cap is now around $1.2 trillion, with the stock having successfully reclaimed its $1 trillion market cap. Furthermore, it is the only FAANG constituent that has hit new all-time highs after the earnings; while Netflix (NFLX) and Amazon also soared after their respective Q4 results, they are still below their 2021 highs.
Meta Stock Split History
Meta Platforms went public on May 18, 2012, and priced the IPO at $38 per share. The company hasn’t ever split its shares, whereas the other FAANG constituents - which have been listed for a much longer time in comparison - have all undergone multiple stock splits.
For instance, Alphabet and Netflix have split their shares twice, while Amazon has done so on four occasions. Apple, which has the longest history as a listed company among its FAANG peers – it went public in 1980 – has split its shares on five occasions, most recently in 2020.
Why Do Companies Split Shares?
Companies split shares when the stock price rises and becomes “costly” or “unaffordable” for retail investors. A lower share price helps increase liquidity as more retail traders can then buy the shares.
However, barring an increase in trading volumes, a stock split does not have any impact on a stock’s fundamentals. That said, markets perceive a stock split as a positive and usually, we'll see a stock go higher on the announcement of a stock split.
Will Meta Stock Split in 2024?
During Meta’s most recentearnings call there wasn’t any mention of a stock split. However, as the stock touches new highs closer to the $500 per share range, investors are wondering whether the Mark Zuckerberg-led company will announce a stock split.
Notably, based on absolute stock prices, Meta is the second most expensive FAANG stock after Netflix - so, investors’ craving for a stock split is not totally misplaced.
How High Can Meta Stock Go?
After Meta’s stellar Q4 earnings report, Wall Street analysts scrambled to increase their target prices. KeyBanc's Justin Patterson raised his target price to a Street-high of $575, which is 22.4% higher than yesterday’s closing prices.
Elsewhere, Deepwater Asset Management’s Gene Munster put an “unofficial” $700 target price on Meta, and said that the social media giant can rise 50% over the next two years.
All said, I believe as Meta stock continues to scale new highs, the board will eventually consider a stock split - which could only add fuel to the stock’s stellar rally. Though the split may or may not be announced in 2024, if the share price rises to four figures, the company should absolutely look at one.
On the date of publication, Mohit Oberoi had a position in: META , AAPL , AMZN , GOOG , NFLX . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.