Stock splits have swept the market in recent years, as almost all of the “Magnificent Seven” have split their stocks, as well as a number of other high-profile stocks such as Shopify and Walmart.
Investors often speculate on what could be the next stock to split their shares. Stock splits do not add value or change the fundamentals of a stock. They essentially divide the stock pie into more pieces, meaning that individual shareholders still own the same stake they did before. There is some evidence that shares tend to outperform after a stock split, according to research from Bank of Americaalthough it is not clear why.
This could be because companies can choose the timing of their stock splits and usually choose to do it from a position of strength when they expect the stock to continue to rise. It could also be because investors tend to respond positively to a stock split, seeing it as a signal to buy the stock.
A stock that could be close to share its shares is ASML Holdings (ASML -0.65%). The Dutch maker of semiconductor manufacturing equipment now trades for more than $700 per share, making it one of the highest-priced stocks on a per-share basis in the market.
So will ASML split its stock? The company has had five splits in its history, but none in the last 10 years, and two of those were reverse splits related to a special dividend and a synthetic buyback.
Management has given no indication that it is considering a stock split, but that is not unusual. Companies usually don’t discuss it until a decision has been made. Let’s take a look at the case for and against an ASML stock split.
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Because ASML could share its stock
Given its share price above $700, ASML certainly seems like a good candidate for a stock split.
A stock split would make the stock price lower, which tends to make it more attractive to retail investors and even employees who want to buy the stock.
A stock split can also act as a stopgap for a company’s growth, as it effectively resets the stock price for further growth, and investors can expect ASML to split its stock later. that many of his peers in the semiconductor industry have done so, including Nvidia, Super Micro Computerand Broadcom.
Finally, a stock split also acts as a sign of confidence from management, indicating that it expects the stock to continue moving higher.
Because a split is unlikely
The biggest reason why ASML is more likely to wait to split its stock is because the company has struggled lately. The stock is down year to date even as the S&P 500 The index has grown this year, and the business has also faced challenges.
The stock is currently down 33% from its peak this summer, as the company cut its guidance for 2025, and also reported weak bookings in the third quarter, a sign that demand is slowing of waiting due to a series of headwinds in semiconductor equipment. industry That includes slowing demand from China, which had accounted for nearly half of its revenue this year, although it is expected to normalize at a rate of about 20% next year.
ASML recently returned to year-over-year revenue growth, which is another sign of the challenges the company faces.
Given the weakness in the stock, a split seems unlikely – the stock has declined significantly, and management would have announced a split when the stock was higher if it thought one was warranted.
Will ASML do a stock split?
Investors hoping for an ASML stock split should probably be patient. With the stock off its peak since the summer and other questions about the business weighing on its performance, a stock split would not make sense now.
However, that dynamic can change quickly, especially if the stock starts to rebound. If ASML stock can get back to $1,000, don’t be surprised to hear chatter about a stock split picking up steam.