This article was updated on April 6, 2018, and originally published on Nov. 19, 2017.
After a torrid 2017, Walmart (WMT +0.97%) shares have cooled off this year as investors were disappointed by slowing e-commerce growth in its fourth-quarter report. Still, the company issued solid guidance for 2018, and expects U.S. e-commerce growth to grow 40% this year after it slipped to just 23% growth in the fourth quarter. Meanwhile, the company is thinking big outside its core retail business, pursuing potential deals with healthcare companies like PillPack and insurance provider Humana. Walmart also appears close to taking a majority stake in Flipkart, India's biggest e-commerce company, though others are trying to upend that deal.
Over the last year, the stock is up 22%, and that performance along with the possible acquisitions on the horizon may have some investors thinking about a stock split from the venerable retailer that would reduce the price per share and increase the number of shares. In fact, Walmart has never before let its stock get into the triple digits, as it did earlier this year, having split it every time it reaches that threshold. While the share price has pulled back to less than $90, there's a good chance the company would do a stock split if it surges again.
Image source: Walmart.
The history
Walmart has enacted 2-for-1 splits 11 times since it went it public in 1970 at $16.50 per share. The chart below shows the split dates and the price of the stock on the day of the split.
| Date | Market price |
|---|---|
| May 1971 | $47.00 |
| March 1972 | $47.50 |
| August 1975 | $23.00 |
| November 1980 | $50.00 |
| June 1982 | $49.875 |
| June 1983 | $81.625 |
| September 1985 | $49.75 |
| June 1987 | $66.25 |
| June 1990 | $62.50 |
| Feb. 1993 | $63.625 |
| March 1999 | $89.75 |
Source: Walmart.
As you can see, Walmart's stock splits were once fairly frequent, occurring in each of its first two years as a public company, and then five times in the 1980s. However, it's now been 18 years since the retailer's last stock split. Walmart's share price growth slowed dramatically after the dot-com era as the stock traded sideways through the aughts before climbing after the Great Recession. Still, it's put up unbelievable returns over its history. If you had purchased 100 shares of Walmart at its IPO, you would now have 204,800 shares, and that $1,650 investment would be worth more than $18 million, not including dividends.
After its recent surge and the acquisition of Jet.com, Walmart is on stronger footing than it's been in years. The company has posted 13 straight quarters of comparable-store sales growth and its two-year comps were up 4.5% in the fourth quarter, its best performance in eight years.
It's important for investors to be aware that a stock split does not add any value. It merely gives investors more shares at a lower price. Still, there's often a psychological benefit in splitting the stock as it's a sign that management sees more upside to it in the future. Splitting the stock also makes it more liquid, which can encourage retail investors to buy it.
What's next for Walmart
At last October's investor meeting, Walmart said it would continue to invest in online channels by opening another 1,000 grocery pickup locations, on top of the more than 1,200 it already has. As part of the shift in its capital spending, it said it would scale back on new store openings by adding fewer than 15 Supercenters and 10 Neighborhood Markets domestically.
Management has not discussed the possibility of a stock split, but if shares continue to climb, the probability of it will increase. If the stock returns to triple digits, expect calls for a split to heat up.
