Stock splits have gained a lot of traction in recent years. Fortunately, it is one of the more encouraging announcements for shareholders.
A stock split, of course, does not affect a company’s market capitalization. However, it reduces the value of each individual share, making it easier for the stock price to multiply and provide investors with significant gains.
In 2022, we’ve seen several companies split their stock, including Tesla
TSLA
, Palo Alto Networks
PANW
, and Nintendo
NTDOY
. Below is a chart illustrating the year-to-date performance of all three stocks, with the S&P 500 blended in as a benchmark.
Image Source: Zacks Investment Research
It raises a valid question: which of these stock splits has been the best buy? Let’s take a closer look.
Tesla
We’re all familiar with Tesla, the company that has revolutionized the EV (electric vehicle) industry. It’s been one of the best-performing stocks over the last decade, quickly becoming a favorite among investors.
Earlier in June of 2022, the mega-popular EV manufacturer announced that its board approved a three-for-one stock split; shares began trading on a split-adjusted basis on August 25
th
, 2022.
Since the split, it’s been a challenging road for TSLA shares, down nearly 40% and widely lagging behind the general market.
Image Source: Zacks Investment Research
Nintendo
Nintendo is a worldwide leader in game development and publishing. Some of its beloved game franchises include familiar names such as
Donkey Kong, Pokémon, The Legend of Zelda, and Super Mario Brothers
.
The company executed a 10-for-1 stock split that took place over the weekend of October 1
st
, 2022.
Shares have tacked on 2.3% in value following the split so far, easily crushing Tesla’s performance. Still, the performance has widely lagged behind the S&P 500’s 11% gain during the period.
Image Source: Zacks Investment Research
Palo Alto Networks
Palo Alto Networks offers network security solutions to enterprises, service providers, and government entities worldwide.
PANW’s three-for-one stock split in mid-September seemingly flew under the radar. The company’s shares started trading on a split-adjusted basis on September 14
th
.
Since the split, PANW shares haven’t found many buyers, down roughly 8% and underperforming the general market by a visible margin.
Image Source: Zacks Investment Research
Bottom Line
With splits, liquidity within shares is increased. Additionally, it allows investors to reap considerable gains as the stock climbs back up.
Companies often execute a split when shares become too pricey for individual investors, massively alleviating barriers to entry.
All three stocks above – Tesla
TSLA
, Palo Alto Networks
PANW
, and Nintendo
NTDOY
– have all split their shares in 2022 to boost liquidity.
Of the three, Nintendo has been the best performer post-split, although all have lagged behind the S&P 500 since their split date.
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