Stock Splits Surge in 2024: A Trend to Watch for Investors
Stock splits have become increasingly popular in 2024 as companies aim to attract retail investors. Following the rise of retail investors post-COVID-19, companies like Walmart and Nvidia have opted for stock splits to make their shares more accessible to a wider range of investors, including employees.
In Q2 2024, there were 100 announced stock splits, marking the highest level since Q2 2023. The first half of 2024 saw a total of 168 split announcements, the highest for a first half in over a decade.
The majority of stock splits are driven by reverse splits, where shares are reduced and stock prices increase while the company’s market value remains the same. This trend has been ongoing for years, with reverse splits outpacing traditional splits.
In July 2024, there were 30 split announcements, with 18 being reverse splits and 10 traditional splits. This marked the highest number of July split announcements in nine years. While August saw a slight dip with 27 announcements, it still remained historically high.
As the trend of stock splits continues, investment teams must adjust stock prices accurately to conduct time-series analysis. The number of recorded price adjustments for North American splits has been steadily increasing, with H2 2024 recording the most adjustments in five years.
Despite the rise in reverse splits, traditional splits tend to garner more media coverage as they are often enacted by large caps to attract new investors. Some notable traditional splits in 2024 include Walmart (3-for-1), Nvidia (2-for-1), Chipotle (2-for-1), Broadcom (50-for-1), and Williams-Sonoma (10-for-1).
On the other hand, notable reverse splits for 2024 include Qiagen (24.25-for-25), Rent the Runway (1-for-20), BuzzFeed (1-for-4), New York Community Bancorp (1-for-3), SITE Centers Corp (1-for-4), The Container Store (1-for-15), and Allbirds (1-for-20).
The momentum in stock splits continues in Q3 2024, with more companies likely to follow suit as corporations attract attention through these announcements. Traditional splits tend to have a bullish effect on stock prices, with a one-year return of 25% from the date of the split announcement, according to Bank of America. This trend could encourage companies of all market caps and industries to consider utilizing either traditional or reverse splits as a corporate action.
In conclusion, stock splits are an important trend to watch for investors in 2024. As companies make their shares more accessible through splits, this could have a significant impact on stock prices and investment opportunities. Stay informed and consider the implications of stock splits on your financial decisions.