Stock-Split Watch: 2 Fantastic Growth Stocks That Look Ready to Split
The stock market has a fever -- a stock split fever. Walmart, Chipotle Mexican Grill, and Nvidia are just some of the companies to announce stock splits so far this year. Undoubtedly, more will follow. But which ones? Here are two fantastic growth stocks that I think are ready.
Image source: Getty Images.
MercadoLibre
Topping the list of stocks ready for a split is MercadoLibre (NASDAQ: MELI). The company, which operates a Latin-American-focused e-commerce and payments platform, has a stock price above $1,700 -- making it a prime candidate for a stock split.
That said, if history is any guide, investors may continue to wait for a MercadoLibre stock split. It hasn't executed a stock split during its 25 years as a public company.
The company's stock is nearing all-time highs thanks to its superb fundamentals. Over the last 12 months, the company generated $15.6 billion in revenue and $1.1 billion in net income, with quarterly earnings growing 71% year over year.
MELI Revenue (TTM) data by YCharts
Analysts expect MercadoLibre's blistering revenue growth to continue, with this year's sales estimated to rise 33% from a year ago.
At any rate, a stock split would be a great move for the company, as a lower price might attract more retail interest to this red-hot growth stock.
Spotify Technology
Next up is Spotify Technology (NYSE: SPOT). What should immediately catch any investor's eye with Spotify is how the company's stock has turned around over the last two years.
In late 2022, the stock looked left for dead. Shares had crumbled more than 80% off their all-time high. Yet, Spotify CEO Daniel Ek showed his mettle by cutting costs, and now it's clear that his strategy has paid off.
After struggling to turn a profit, the company recently turned in a quarterly net profit of $214 million. In addition to the previously mentioned cost cuts, Spotify is also growing its ad-based business. While subscription fees still make up the vast majority of the company's revenue (about 89% of total revenue), ad-based revenue has jumped to $389 million, or 11% of total revenue, as of the company's most recent quarter (ended in March).
Image source: Statista.
In any event, Spotify shares now trade at around $300 a share -- making them expensive for many investors who balk at high-priced stocks. The company's stock, which debuted via an initial public offering in 2018, has never undergone a stock split. However, now might be the right time, as a 2-for-1 or even a 3-for-1 stock split might attract additional interest in Spotify stock from retail investors.Should you invest $1,000 in Spotify Technology right now?
Before you buy stock in Spotify Technology, consider this:
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*Stock Advisor returns as of June 3, 2024Jake Lerch has positions in MercadoLibre, Nvidia, and Spotify Technology. The Motley Fool has positions in and recommends Chipotle Mexican Grill, MercadoLibre, Nvidia, Spotify Technology, and Walmart. The Motley Fool has a disclosure policy.
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