Many of the Biggest Companies Today are doing Stock Splits

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What if an equity could be born again? If you are Amazon or Alphabet, yes you can! Shopify and Tesla are highly likely to follow them down that road to Capitalism's ticket to redemption.

I have mixed feelings about stock-splits. The rhetoric is stocks tend to go up before and after them. Stock splits make some stocks more affordable to mainstream retail investors, but they also?dramatically reduce volatility?that’s profitable for investors. Still at a time of value added investing in profitable companies with rising-interest rates a level head indicates good value here?

Stock splits occur when a company divides up its shares to lower the price and increase the overall number of shares available. Companies typically split their stock when the share price has gotten very high.

Since I cannot give much realistic investing advice?given such an unstable and volatile uncertain macro and corporate guidance environment, at least I can?give some facts?about which companies to watch here regarding the good ol’ stock split.

Tempting Correction Offers

I don’t actually think that Stock splits can provide a short-term boost for investors, but I do think in this climate some of them will be?more tempting than usual?with the NASDAQ 100 correction.

Here are some on my radar:

Shopify

After the stock's eye-popping run that saw it gain as much as 6,350% since its initial public offering in 2015, management announced plans for a 10-for-1 stock split. The measure, which requires an amendment to its articles of incorporation, will be voted on at the company's upcoming annual and special meeting of shareholders, scheduled for June 7.

• 10 for 1 split, current price $353.?YTD: down 71.3%.

I really like Shopify if the stock continues to go down given their scale and ability to invest more in their business. This would be a good name to pick up at the height pain of a recession.

Amazon

• 20 for 1 split, new current price is $126.
• Stock splits are not common for AMZN, and this is the first one for the company since 1999. The split was announced at the same time as a new $10 billion share repurchase.

As Amazon over-hired as a pandemic beneficiary they might have some bad press in the next few months as their guidance worsens.

The problem is the reduced volatility in the stock makes it a somewhat poor choice unless you are willing to hold for a very long time. Amazon with Walmart likely have a duopoly in American E-commerce sales at this point.

Alphabet

• 20 for 1 split, goes live July 15th, 2022. YTD: down 21%

Alphabet said sales were up 23% year-over-year in the March quarter, its slowest growth rate since 2020.

Still Google’s diversification is getting a lot better now with Google Cloud and interesting other bets and implications of its A.I. global talent. TikTok as a mobile YouTube competitor is likely to take some of its revenue in the decade ahead in advertising.

Apple has an agreement with Google that it won't develop its own internet search engine so long as Google pays it to remain the default option in Safari. At a certain point Apple could change this at any time. Google's payment to Apple in 2021 to maintain this status quo may have reached up to $15 billion.

In 2021, Google Cloud had an operating loss of $3.1 billion -- a significant amount, albeit a big improvement from the $5.6 billion loss in the prior year. In some ways Alphabet is just paying to stay relevant. Google Cloud while growing, is not making great headway into Azure and AWS’s duopoly on the growing market.

According to?Fidelity:?(you can also follow Monthly Stock-Split Calendars to study if there are any good opportunities).

Tesla

The automaker's annual investor meeting will take place in early August, at which time the shareholders will likely vote to authorize an increase in the share count. That would pave the way for a stock split.

• A 5 for 1 stock split is likely in the cards.

I am a bear on Tesla’s stock and would short if it I could. I don’t like the business model or the sentiment here but you cannot argue with facts, in 2021, and Tesla reported $53.8 billion in total revenue.

Don’t be surprised if Tesla’s price therefore at the end of 2022 is around $120 after a stock split.

June

Google Fidelity Stock-split calendar. Or follow the link above.

Others

• ACM Research: Market value:?$716.4 million
• Stock split:?3-for-1

It develops and manufactures semiconductor processing equipment for wafer-level production applications. The company primarily supplies single-wafer cleaning equipment and considers its cleaning tools best-in-class, offering higher yields and greater efficiency than competitor equipment.

It’s worth following, though the Chip industry needs to correct more as well. Should note that they have a heavy reliance on customers in China.

• Dexcom Market value:?$30.9 billion ($DXCM)
• Stock split:?4-for-1 - YTD: down 44%.

Diabetes has increased with Covid-19 and some long-covid cases. In recent years the stock went up way too much, but I like the healthcare sector in a major correction.

DexCom, Inc. is a company that develops, manufactures, produce, and distributes continuous glucose monitoring systems for diabetes management. Global expenditures for diabetes care were estimated at $966 billion in 2021, according to research firm Statista.

The stock split is a bit sneaky, since it was worth closer to $120 back in 2018. Still if it continues to correct it could be a good long-term deal at some point.

Do Your Own Research (Who Else?)

• Napco Security Technologies $NSSC
• Home furnishings retailer $RH (pretty crazy earnings beat in 2022).

Let me know if you have any opinions on these?

Stock Splits and stock buybacks are king again, because when the macro sector goes to hell and the NASDAQ 100 has corrected 23%, it's damage control time for BigTech.

If you want to follow my insights on stocks, investing and stock trading including buy alerts and so forth, you can do so?here.

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