For more than three decades, investors have pretty consistently had a next-big-thing technology or game-changing innovation to captivate their attention. Since late 2022, nothing has garnered more interest or capital from investors than the artificial intelligence (AI) revolution.
But on rare occasion, more than one next-big-thing trend can coexist at the same time. In addition to the excitement surrounding the rise of AI, investors have flocked to influential businesses conducting stock splits in recent years.
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Stock-split euphoria continues to manifest on Wall Street
Think of a stock split as a tool on the proverbial belt of public companies that can be used to superficially alter share price and outstanding share count (by the same factor). These changes are cosmetic in the sense that adjusting a company's share price via split doesn't alter its market cap or have any impact on underlying operating performance.
Stock splits can increase or decrease a pubic company's share price -- and there tends to be a big difference as to which variety of split investors prefer. Reverse stock splits, which increase a company's share price, are typically disliked by investors. The companies undertaking reverse splits are usually struggling and rely on reverse splits as a tool to avoid delisting from a major stock exchange.
On the other end of the spectrum, the investment community gravitates to forward stock-split stocks, which are reducing their share price (and correspondingly increasing their outstanding share count) to make their stock more nominally affordable to investors who can't make fractional-share purchases with their broker. Public companies whose share price has soared to the point where a forward split becomes necessary are often out-executing their competition and leading in the innovation column.
Whereas last year's theme was artificial intelligence stocks completing splits, the Class of 2025 stock-split stocks have all been influential non-tech businesses. Two of these highfliers have already completed their respective splits; and prior to trading commencing on June 18, the newest of three major stock splits will officially arrive.
Two industrial behemoths kicked off the 2025 stock-split campaign
Although it was the last of the three premier companies to announce a forward split this year, wholesale industrial and construction supplies company Fastenal (FAST -1.63%) was the first to officially complete a forward split. The 2-for-1 forward split that went into effect following the close of trading on May 21 marked the ninth time in 37 years the company's shares have been split. With its shares up well over 200,000% since its initial public offering in 1987 (including dividends), stock splits have become part of Fastenal's corporate culture.
The beauty of Fastenal's operating model is that it's intricately tied to the health of the U.S. economy (i.e., it's cyclical). Even though downturns are a normal and inevitable aspect of the economic cycle, they're traditionally short-lived. The average U.S. recession since the end of World War II has lasted only 10 months, with no downturn surpassing 18 months in length. In comparison, the average economic expansion has endured for five years over the last eight decades, which has allowed demand for Fastenal's products and inventory solutions to grow in lockstep with its long list of clients.
Fastenal's managed inventory solutions are also hitting home with its customers. The on-site placement of internet-connected industrial supply vending machines and inventory bins, among other solutions, can help its clients save money, as well as help Fastenal better understand the supply chain needs of its customers.
The next preeminent stock split of 2025 was auto parts supplier O'Reilly Automotive (ORLY 0.76%), which completed its largest-ever forward split (15-for-1) following the close of trading on June 9. Though O'Reilly announced its intent to split more than a month before Fastenal, it put the measure to vote at its annual shareholder meeting in mid-May, which allowed Fastenal to beat it to the punch.
O'Reilly Automotive's distribution network has played a key role in its success. When 2024 came to a close, the company had 31 distribution centers and close to 400 hub stores. This hub-and-spoke distribution model ensures that more than 153,000 stock keeping units (SKU) are within reach of outlying stores on a same-day or overnight basis. This allows the company to quickly meet the needs of everyday drivers and mechanics.
Furthermore, O'Reilly Automotive has one of the best share-repurchase programs on Wall Street. Since commencing its buyback program in 2011, its board has authorized nearly $26 billion worth of repurchases, which has reduced its outstanding share count by more than 59%. These buybacks are having a demonstrably positive impact on O'Reilly's earnings per share and making its stock more fundamentally attractive to value seekers.
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This $85 billion juggernaut is officially Wall Street's newest stock-split stock
However, O'Reilly Automotive's moment in the sun as the newest stock-split stock on Wall Street is fairly short-lived. Today, June 18, automated electronic brokerage company Interactive Brokers Group (IBKR -0.71%) will officially begin trading at its split-adjusted price, which accounts for its first-ever forward split (4-for-1).
While O'Reilly Automotive holds the crown as the largest forward split since Chipotle Mexican Grill rattled off a 50-for-1 stock split last year, Interactive Brokers' $85 billion market cap is the largest among the Class of 2025 stock-split stocks. A significant chunk of this market cap comes from Interactive Brokers' unstoppable 271% rally over the trailing-three-year period (as of June 13, 2025).
For brokerages, investor sentiment can play a big role. When investors feel more confident about the health of Wall Street, they're more likely to trade/invest more, as well as use margin loans.
Just as the economic cycle isn't linear and works in Fastenal's favor, the disproportionate nature of boom-and-bust cycles on Wall Street have allowed Interactive Brokers Group to thrive. Based on data from the researchers at Bespoke Investment Group, the average S&P 500 (^GSPC -0.84%) bear market since the start of the Great Depression has endured only 286 calendar days, or roughly 9.5 months.
Meanwhile, the typical S&P 500 bull market has lasted for approximately 3.5 times as long (1,011 calendar days). Long-winded bull markets can provide a lift to all of Interactive Brokers' key performance indicators (KPIs).
On a more company-specific basis, Interactive Brokers' aggressive investments in technology and automation have also played a tangible role in lifting its KPIs. The lower costs associated with automation mean it's able to pass along a higher interest rate to its customers on cash held in accounts. Likewise, it typically charges a lower margin loan rate than competing brokerage firms. Just as Walmart uses its low prices as a competitive advantage to draw consumers into its stores, Interactive Brokers is using its technology and automation as a competitive edge to bring in new accounts and improve the KPIs for existing accounts.
On a year-over-year basis, ended March 31, all of the company's KPI's delivered double-digit improvement. In particular, customer accounts climbed by 32% to 3.62 million, equity on the platform grew 23% to $573.5 billion, margin loans jumped 24% to $63.7 billion, and daily active revenue trades (a measure of customer orders divided by total trading days in a period) rose by 50% to 3.52 million.
The only meaningful headwind for Interactive Brokers at the moment is the stock market's historically pricey valuation. The S&P 500's Shiller price-to-earnings (P/E) Ratio -- also known as the cyclically adjusted P/E Ratio, or CAPE Ratio -- almost hit a multiple of 39 in December. Historically, a sustained reading above 30 has been an eventual precursor to a decline of 20% or greater in the S&P 500. With investor sentiment of paramount importance to Interactive Brokers, this represents a short-term threat to its stock.
But with well-defined competitive advantages and rip-roaring growth for its KPIs, there's no reason to believe shares of Interactive Brokers won't head even higher over the long run.
