Could Meta and Eli Lilly Trigger the Next Stock Split Boom?

While stock splits are far from easy to predict, two names stand out for their potential to do so going forward. Those stocks are Meta Platforms (NASDAQ: META) and Eli Lilly and Company (NYSE: LLY). The basic rationale for a company performing a stock split is simple: it lowers the price of each share, making the stock more accessible for retail investors. It is important to understand that stock splits do not, in and of themselves, change the overall value of a company. But the potential for increased retail demand can benefit a company’s share price.

However, researchers disagree on whether stock splits are actually beneficial. This paper from 2024 indicates that unusual returns surrounding stock split announcements and in the following quarters are “significantly positive." Although other research indicates that stock splits are simply cosmetic and don’t result in a clear positive trend. Despite this, stock splits are events that are of interest to many investors. The reality remains that exorbitantly high share prices can still create a barrier to retail investors purchasing shares.

META: +300% Returns and “Mag 7” Trends Indicate a Stock Split Could Be Coming

Meta’s high share price and strong recent returns are two items contributing to its case as a stock split candidate. As of the June 13 close, Meta trades at around $683. Among stocks in the Russell 1000 Index, only 45 trade at share prices north of $500, showing that prices above this level are particularly out of the ordinary. Meta’s very significant returns over the past three years have led to its current high share price. The stock’s price return over that period is around 315%. Meta’s share price of around $175 at the beginning of this period was likely more accessible to many retail investors than its current price.

Meta’s place among the Magnificent Seven stocks also adds weight to its stock-split case. Since 2020, Meta and Microsoft (NASDAQ: MSFT) are the only two companies in the “Mag 7” that have not performed a stock split. Additionally, according to data from Vanda Research, Meta is one of the most owned individual stocks among retail investors. It ranked as the sixth-most-owned as of Dec. 17, 2024, accounting for 3.7% of retail portfolios. Given that retail investors clearly have this stock on their radar, doing a stock split would increase accessibility for this interested group.

LLY: +$800 Share Price, GLP-1 Market Size Could Boost Retail Interest

Lilly’s share price and rapid appreciation over the past several years are two aspects that set it up for a potential stock split. As of the June 13 close, Lilly’s shares are trading for approximately $819. The company has also experienced around a 176% increase in its share price over the past three years. Lilly is now by far the world’s most valuable stock in the pharmaceutical industry.

Lilly has also seen bouts of retail interest; inflows spiked after approval of the company’s weight loss drug Zepbound. Furthermore, the company’s role in the weight loss drug market could help it become much more well-known by the public at large. A study from The Lancet found that nearly 75% of American adults are either obese or overweight. As awareness of GLP-1 drugs grows, there is a conceivable scenario where a huge percentage of the United States’ population uses or knows someone using Lilly’s medications. It’s not hard to imagine a situation where this greatly increases retail interest in the stock, making a stock split a potential event in Lilly’s future.

META & LLY: 2 Prime Stock Split Candidates

For different reasons, Meta Platforms and Eli Lilly are some of the companies that are more likely to see a stock split in the future. Meta’s share price is high, and not announcing a stock split at some point would keep Meta in the minority among its Mag 7 peer group.

Additionally, Lilly’s very high share price could certainly be prohibitive for retail investors. The market is placing massive expectations on Lilly to continue growing its weight loss drug business rapidly. This is evident by its forward price-to-earnings (P/E) ratio of nearly 33x. This is by far the highest forward P/E ratio of any pharma or biotech stock with a market capitalization of over $100 billion. If Lilly is to realize these expectations, its products will need to become much more ubiquitous. Through osmosis, this could lead to substantially higher retail investor interest, increasing the chance of a stock split.

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