The popularity of stock splits, particularly in the technology sector, has risen dramatically in the past few years. While stock splits do not change a company's fundamentals or market value, they have been known to trigger an emotional response from investors. The increased liquidity makes the stock more accessible to a larger shareholder base, which can positively affect share prices. Historically, stock-split stocks have been shown to grow between 25% and 30% in the year following the event. That's significantly better than the benchmark S&P 500's average annual growth of 10% to 12%.
Recently, Bank of America identified a list of 23 stocks that can be prime candidates for a stock split in 2025. Here's why two stocks from the list can be exceptional picks in 2025.
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Meta Platforms
Looking at social media and digital advertising giant Meta Platforms (NASDAQ: META), there is a lot to be excited about these days, despite the overall market volatility. While the company's stock has pulled back by nearly 13.6% from its 52-week high of $740.90 in early February due to increasing macroeconomic and geopolitical uncertainty, shares are still up 9.3% in 2025.
Meta's stock has surged by 219.8% in the past three years. Despite the significant price appreciation and solid fundamentals, the stock has never split. Hence, the stock seems to be a strong stock split candidate.
Meta has demonstrated exceptional strength in its fiscal year 2024 (ended Dec. 31, 2024), with revenues growing 22% year over year to $164.5 billion and operating profit surging 48% year over year to $69.4 billion. The rapid expansion in profitability can be attributed to the broad reach and unparalleled content distribution and advertising capabilities of its Family of Apps (Instagram, Facebook, Messenger, and WhatsApp) ecosystem. Nearly 3.3 billion people, or more than 40% of the global population, use at least one of Meta's social media apps daily.
Meta is using its advanced artificial intelligence (AI) infrastructure to improve digital advertising returns and user experiences across platforms. The company has also integrated the Andromeda machine learning system, which was developed in partnership with Nvidia, to improve the personalization and targeting of advertisements on its social media platforms. These advanced technological capabilities have driven an 8% increase in the quality of advertisements (based on selected objectives) and are also preparing the company to process larger volumes of advertisements in the coming years.
Meta is also at the forefront in the agentic AI space, with its Meta AI assistant being used by more than 700 million monthly active users. With the management expecting Meta AI to reach a user base of over 1 billion people in 2025, Meta AI is expected to provide the company with huge troves of valuable data. This data can be used to further refine its AI offerings, opening up new revenue streams.
Meta is gearing up to invest $60 billion to $65 billion as capex in 2025, with a major portion allocated to AI infrastructure. While the high level of planned capex raises concerns about the return on investment in the short run, these infrastructure investments could prove highly lucrative in the long run.
Considering these tailwinds and the high probability of an upcoming stock split, Meta may be a compelling pick for astute investors.
Netflix
Leading streaming service Netflix (NASDAQ: NFLX) is another company that seems ready for a stock split in 2025 -- almost a decade after the 7-for-1 stock split in 2015.
Netflix ended fiscal year 2024 (ended Dec. 31, 2024) with more than 300 million paid memberships. With multiple people watching Netflix content per household, the company estimates its global audience base to be over 700 million people. Since the company's global paid subscriber base is significantly larger than those of major competitors like Walt Disney's Disney+ and Warner Bros. Discovery's HBO (with 100 million and 95.8 million subscribers, respectively), Netflix's content development costs benefit from economies of scale.
Netflix's advertising business is also emerging as a major revenue stream, with ad-supported tier memberships across ad markets rising 30% sequentially in the fourth quarter of fiscal year 2024. Plus, view hours per member on ad-supported plans are similar to those on non-ad-supported plans. Netflix now aims to use high user engagement to make the ad-supported tiers even more attractive to advertisers in 2025.
Subsequently, Netflix now boasts of robust top-line and bottom-line performance. Revenues were up 16% year over year to $39 billion, while operating margins expanded 610 basis points year over year to 26.7%. Netflix's net income was also up by 61% year over year to $8.71 billion. The company has also become a cash-generating machine, with $7.4 billion in operating cash flow and $6.9 billion in free cash flow in FY 2024. Netflix is also committed to returning value to shareholders. In FY 2024, the company repurchased $6.2 billion worth of shares.
Against the backdrop of Netflix's high-quality business model, strong financials, and high share price, the stock seems like a smart buy in 2025.
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Bank of America is an advertising partner of Motley Fool Money. 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. Manali Pradhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America, Meta Platforms, Netflix, Nvidia, Walt Disney, and Warner Bros. Discovery. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
