It's been a fantastic year for the stock market. The S&P 500, NasdaqComposite, and DowJonesIndustrialIndex are up 21.9%, 22.2%, and 13.7% year to date, respectively, at this writing.
With so many stocks moving higher, there are bound to be a few stock splits coming, and I think these three tech stocks could be among them.
Image source: Getty Images.
1. Netflix
With a share price above $700 as of this writing, it's clear that Netflix(NASDAQ: NFLX) is ready for a stock split. The company last split its shares back in 2015, and with its stock trading near its all-time high, another split could be announced as soon as this month.
Yet even if Netflix's board of directors passes on a stock split, investors should strongly consider adding shares of this streaming giant to their portfolios. The company has demonstrated that it can more than hold its own against stiff competition from the likes of Amazon, Apple, and Disney, among others.
Despite increased competition over the last three years, Netflix has grown its revenue by 22% over that period. Moreover, its operating margin now stands at 24% -- the highest in its time as a public company.
NFLX Operating Margin (TTM) data by YCharts.
That's all thanks to keen policy decisions such as cracking down on password sharing and instituting an advertising-supported tier.
In short, Netflix has withstood serious challenges over the last few years and is arguably stronger than ever. Investors should take notice.
2. Spotify Technology
SpotifyTechnology(NYSE: SPOT)had its initial public offering (IPO) in 2018, and has never split its stock. That could change soon, as the company's shares have almost doubled year-to-date to more than $360, making the stock one of the hottest performers this year.
Among the reasons why Spotify could be poised to announce its first-ever split is the company's newfound profitability. CEO Daniel Ek pledged to bring costs down, and since then Spotify's operating margin has increased substantially. At its lowest, the company's operating margin stood at negative 6.9%. It has boosted that to 2.7% by raising subscription fees and engaging in several rounds of layoffs.
SPOT Operating Margin (TTM) data by YCharts.
In any event, stock split or not, Spotify remains a company that investors should consider.
3. Meta Platforms
MetaPlatforms(NASDAQ: META) has been one of 2024's best-performing stocks. Year-to-date, Meta shares are up 68% to nearly $600, near their all-time high.
That said, Meta may not split its shares -- even if investors would love for it to do so.
Notably, it is the only "Magnificent Seven" stock that has never split its shares. That doesn't mean that Meta won't do it eventually, but history is not on the side of those wishing for a split.
Nevertheless, investors may want to consider buying shares of Meta given its incredible growth and profitability. In the second quarter, Meta's revenue surged by 22%, while net income soared by 73%. The company's massive scale makes it one of the biggest players in the still rapidly growing digital ad market. With that in mind, many portfolios would benefit from adding shares of Meta -- whether they split or not.
Don’t miss this second chance at a potentially lucrative opportunity
Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.
On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
- Amazon: if you invested $1,000 when we doubled down in 2010, you’d have $21,122!*
- Apple: if you invested $1,000 when we doubled down in 2008, you’d have $43,756!*
- Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $384,515!*
Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.
*Stock Advisor returns as of October 14, 2024
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jake Lerch has positions in 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: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
