Shares of Metaplatform, Spotify, and Netflix are trading at high prices.
This year has been a great year for the stock market. As of this writing, the S&P 500, Nasdaq Composite Index, and Dow Jones Industrial Average are up 21.9%, 22.2%, and 13.7%, respectively, since the beginning of the year.
With so many stocks going up, I think there’s definitely going to be some stock splits, and these three tech stocks could be among them.
Image source: Getty Images.
1. Netflix
With the stock price above $700 as of this writing, it’s clear that Netflix (NFLX -0.98%) is ready for a stock split. The company last split its stock in 2015, and the stock is trading near all-time highs, with more splits likely to be announced this month.
But even if Netflix’s board passes a stock split, investors should strongly consider adding shares of the streaming giant to their portfolios. The company has proven itself well-equipped to face stiff competition from the likes of Amazon, Apple, and Disney.
Despite increased competition over the past three years, Netflix grew its revenue by 22% over that period. Additionally, the company’s operating margin currently stands at 24%, the highest in its public company era.
NFLX Operating Margin (TTM) data by YCharts.
It’s all thanks to shrewd policy decisions like cracking down on password sharing and introducing ad-supported tiers.
In short, Netflix has endured serious challenges over the past few years and is perhaps stronger than ever. Investors should be careful.
2. Spotify Technology
Spotify Technology (SPOT 0.03%) had an initial public offering (IPO) in 2018 and has never split its stock. That could change soon, as the company’s stock has nearly doubled since the beginning of the year to more than $360, making it one of the hottest stocks this year.
One reason Spotify is poised to announce its first-ever split is the company’s newfound profitability. CEO Daniel Ek promised to cut costs, and Spotify’s operating margins have increased significantly since then. The company’s operating profit margin was at least -6.9%. By raising license fees and implementing several layoffs, the percentage was pushed up to 2.7%.
SPOT Operating Margin (TTM) data by YCharts.
Either way, stock split or not, Spotify is still a company that investors should consider.
3. Metaplatform
Metaplatform (META -0.70%) is one of the best performing stocks of 2024. Meta shares have risen 68% since the beginning of the year to nearly $600, near all-time highs.
That being said, Meta may not split its stock even if investors want it to.
What is noteworthy is that it is the only stock among the Magnificent Seven that has not undergone a stock split. That doesn’t mean the meta won’t do it eventually, but history isn’t on the side of those who want division.
Nevertheless, given Meta’s impressive growth and profitability, investors may want to consider buying Meta stock. In the second quarter, Meta’s revenue increased 22% and net income increased 73%. The company’s sheer size makes it one of the largest players in the still rapidly growing digital advertising market. With that in mind, many portfolios would benefit from adding Meta stock, split or not.
Alphabet executive Suzanne Frye is a member of The Motley Fool’s board of directors. Randi Zuckerberg is a former head of market development and spokesperson at Facebook, sister of Meta Platforms CEO Mark Zuckerberg, and a member of the Motley Fool’s board of directors. John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool’s board of directors. Jake Lerch has held positions at Alphabet, Amazon, Nvidia, Spotify Technology, Tesla, and Walt Disney. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Netflix, Nvidia, Spotify Technology, Tesla, and Walt Disney. The Motley Fool recommends the following options: A long January 2026 $395 call on Microsoft and a short January 2026 $405 call on Microsoft. The Motley Fool has a disclosure policy.
