Stock Splits: What You Need to Know for a Profitable Second Half of 2024
One of the hottest trends on Wall Street right now is companies conducting stock splits, aside from the buzz around artificial intelligence (AI). But what exactly is a stock split, and why should investors pay attention to them?
A stock split is when a publicly traded company adjusts its share price and outstanding share count by the same factor, typically to make shares more affordable for retail investors or to meet listing standards on a major stock exchange. While this doesn’t impact the company’s market cap or performance, it can signal growth and optimism to investors.
In 2024, nine high-profile stocks have announced or completed a stock split. But not all of these stocks present the same outlook for investors. Let’s take a closer look at one stock to avoid and one to consider for the second half of 2024.
Stock-split stock to avoid: Nvidia (NASDAQ: NVDA)
Despite its popularity, AI powerhouse Nvidia recently completed a 10-for-1 forward stock split. While Nvidia dominates in AI-graphics processing units (GPUs), concerns about overvaluation and increasing competition raise red flags for investors.
With a history of early-stage euphoria in tech trends leading to market corrections, Nvidia’s current valuation and competitive landscape suggest caution is warranted. Additionally, growing competition and decreasing reliance from key customers on Nvidia’s hardware could impact its market share in the future.
Stock-split stock to consider: Sirius XM Holdings (NASDAQ: SIRI)
In contrast, Sirius XM Holdings is set to complete a 1-for-10 reverse stock split as it merges with Liberty Media’s Sirius XM tracking stock. Sirius XM’s revenue diversity, strong subscription-based model, and steady operating performance make it an attractive opportunity for investors.
With a low forward-year earnings multiple and a history of stable cash flow, Sirius XM presents a compelling value proposition. Investors can benefit from the company’s unique position in the satellite-radio market and its ability to weather economic downturns.
Choosing the Right Investments for the Future
As we navigate the second half of 2024, investors should carefully evaluate stock split opportunities and consider the long-term growth potential of companies like Sirius XM Holdings. By staying informed and strategic in their investment decisions, investors can position themselves for success in an evolving market landscape.
At Extreme Investor Network, we provide expert insights and analysis to help investors make informed decisions and maximize their returns. Stay ahead of the curve with our in-depth research and expert recommendations for profitable investments in the ever-changing world of finance.