Meta Platforms(US:META) The Motley Foolยท2025-03-26 09:06Group 1: Stock Splits Overview - Stock splits are cosmetic events that alter a company's share price and outstanding share count without impacting market capitalization or operating performance [2] - There are two types of stock splits: forward splits, which lower nominal share prices to make shares more affordable for retail investors, and reverse splits, which increase share prices and are less popular [3][4] - The investment community favors forward stock splits, typically associated with companies outperforming their competition and leading in innovation [4] Group 2: Current Market Trends - In 2024, numerous high-profile stock splits occurred, raising investor interest in identifying potential blockbuster stock-split candidates for 2025 [5] - Many companies with high institutional ownership, such as AutoZone, Netflix, and FICO, are less likely to pursue stock splits due to their limited retail investor presence [9][10] Group 3: Meta Platforms as a Candidate - Meta Platforms, a member of the "Magnificent Seven," has never completed a stock split and currently has a share price around $600 with retail ownership nearing 29%, making it a prime candidate for a split [11][12] - Meta's competitive advantages include attracting 3.35 billion daily active users across its apps, which enhances its advertising pricing power, with a 10% increase in average ad prices last year [13] - The company generates approximately 98% of its net sales from advertising and is well-positioned to benefit from economic expansions, as well as being a key player in the AI revolution [14][15] - Meta has substantial financial resources, closing 2024 with $77.8 billion in cash and generating over $91.3 billion in net cash from operating activities, allowing it to invest in growth initiatives [17] - The combination of a strong operating model and significant retail ownership positions Meta Platforms as a likely candidate for the first blockbuster stock split of 2025 [18]