Key Points
Palantir stock has been a huge winner since the company went public in September 2020.
The company has yet to complete a stock split.
Palantir stock would likely need to go significantly higher before the company decides to do a stock split.
Palantir Technologies (NASDAQ: PLTR) had its initial public offering (IPO) in September 2020. The company sold its first round of public shares to institutional buyers and other investors for $7.50 per share and closed out its first day of trading priced at $9.50 per share.
With the stock currently trading at roughly $179 per share, Palantir is up more than 1,790% since market close on the day of its IPO. Based on that incredible performance, investors may be wondering if the stock is worth buying ahead of a potential stock split.
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Should investors buy Palantir in anticipation of a stock split?
When its share price reaches a point that may be practically or psychologically prohibitive for some investors, a company may opt to carry out a stock split. Breaking its share structure down into a larger number of shares has the effect of lowering the company's share price without doing anything that alters the fundamentals of the business or how much each investor owns. On the other hand, stock splits have recently been shown to make shares significantly more attractive for some investors and have often corresponded with increased bullish momentum.
While Palantir has seen explosive valuation gains in recent years, its current share price is not necessarily high enough to warrant a stock split. With that in mind, it's unlikely that Palantir will opt to split its stock unless shares march well above their current valuation levels.
For investors who expect that Palantir's strong sales and earnings growth will translate into sales and earnings gains that push the stock higher and warrant a potential split, buying shares today would seemingly be a no-brainer. On the other hand, buying shares today in anticipation of an imminent stock split that helps push the company's valuation higher probably doesn't make much sense.
Should you buy stock in Palantir Technologies right now?
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.