Since the S&P 500's bull market began in October 2022, no trend has provided a bigger lift to equities than the evolution of artificial intelligence (AI). In Sizing the Prize, the analysts at PwC estimated AI would bolster the worldwide economy to the tune of $15.7 trillion come 2030.
However, AI isn't the only reason Wall Street's major indexes keep climbing. In addition to the long-term potential AI brings to the table, investor euphoria surrounding stock splits in high-flying companies has kept the stock market's engine humming along.
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Stock-split euphoria has helped power the broader market higher
A stock split is a mechanism publicly traded companies have at their disposal which allows them to cosmetically alter their share price and outstanding share count by the same magnitude. These adjustments are surface-scratching in the sense that stock splits don't affect a company's market cap or its operating performance.
Although splits can increase (reverse split) or decrease (forward split) a company's share price, there's a clear delineation as to which variety of split investors typically gravitate to.
Reverse splits that boost a company's share price and concurrently reduce its outstanding share count by the same factor are often avoided by investors. This type of split is usually undertaken by companies that are struggling on an operating basis and completing their split in an effort to avoid delisting from a major U.S. stock exchange.
On the other hand, companies that conduct forward splits are generally sought after by investors. If a company has to lower its share price to make its stock more nominally affordable for retail investors who can't purchase fractional shares with their broker, it's often doing something right. This "something" comes in the form of superior operational execution and top-tier innovation.
But as you're about to see, not all forward stock-split stocks are necessarily great businesses.
Non-tech stock-split stocks have taken center stage in 2025
Last year, more than a dozen prominent stocks announced and completed a forward split, many of which can be traced to the technology sector and the artificial intelligence revolution. This includes the face of the AI movement, Nvidia, as well as one of the newest members of the trillion-dollar club, Broadcom.
In 2025, only a small number of high-profile companies have announced and completed stock splits. But the one factor they all have in common is they don't hail from the tech sector.
Wholesale industrial and construction supplies company Fastenal (FAST -0.14%) was the first to actually complete its split (2-for-1) following the close of trading on May 21. It's the ninth time Fastenal has split its stock over the last 37 years.
The reason splits have become part of Fastenal's corporate culture is because its stock, including dividends, has increased in value by more than 210,000% since its initial public offering in 1987. This is a reflection of Fastenal's strong cyclical ties to the U.S. economy, as well as its innovation, which has allowed it to become ingrained in the supply chains of America's leading industrial companies.
Following Fastenal's lead was auto parts supplier O'Reilly Automotive (ORLY -0.54%), which effected a 15-for-1 forward split following the end of trading on June 9. O'Reilly's split reduced its nominal share price from nearly $1,400 to around $90.
On top of having one of Wall Street's most-effective share-repurchase programs -- O'Reilly Automotive has spent $25.9 billion to buy back more than 59% of its outstanding shares since the start of 2011 -- the company is benefiting from the aging of America's cars and light trucks. In the latest annual report from S&P Global Mobility, the average age of cars and light trucks on U.S. roadways hit a record 12.8 years in 2025. As vehicles age, drivers and mechanics are becoming more reliant on auto parts chains like O'Reilly.
The other preeminent company that announced and completed a forward split in 2025 is electronic automated brokerage firm Interactive Brokers Group (IBKR 1.07%). It effected its first-ever split (4-for-1) after the closing bell on June 17.
Interactive Brokers' aggressive investments in technology and automation, coupled with the positive impact long-lasting bull markets have had on investors, have virtually all of its key performance indicators pointing higher by a double-digit percentage. It's enjoying double-digit year-over-year growth in total accounts, equity on its platform, and trading activity.
While all three of these businesses have proven their worth to Wall Street, the same can't be said about Wall Street's latest stock-split stock, which is eventually going to implode.
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Wall Street's newest stock-split stock is chock-full of red flags
Following the close of trading on Friday, June 13, clinical-stage traditional Chinese medicine (TCM) company Regencell Bioscience Holdings (RGC -18.78%) put a 38-for-1 forward stock split into effect. This split was designed to reduce Regencell's share price from $595 to less than $16 per share, all while increasing its outstanding share count by a factor of 38.
The magnitude of this split (38-for-1), coupled with Regencell's year-to-date gain of 60,120% (that's not a typo!), as of the closing bell on June 17, would suggest that it's an operating marvel -- but this couldn't be further from the truth.
Since commencing its operations in 2015, Hong-Kong-based Regencell hasn't generated a cent in revenue, nor does it have in any products remotely close to being commercialized, based on its regulatory filings. But this hasn't stopped the company's valuation from soaring to nearly $39 billion.
During fiscal 2024, which ended on June 30, Regencell had $4.74 million in operating expenses, no sales, and ultimately reported a comprehensive loss of $4.32 million. It ended its fiscal year with (drum roll) 12 employees, only four of which are involved with research and development and one tied to sales (despite a complete lack of products).
Here's a snippet of one of the more pertinent risk factors for the company:
Our operations to date have been limited to organizing and staffing our company, partnering with the TCM Practitioner to conduct research studies, identifying potential partnerships and TCM formulae candidates, acquiring TCM raw materials, and conducting research and development activities for our TCM formulae candidates. We have not yet demonstrated the ability to successfully complete large-scale, pivotal research studies. We have also not yet applied for or obtained regulatory approval for, or demonstrated an ability to manufacture or commercialize, any of our TCM formulae candidates.
Furthermore, Regencell's risk factors point to there being no guarantees that the company can successfully patent and/or protect its TCM products from third-party claims or even breaches of intellectual property agreements (not covered by patents) with its own employees.
But wait -- there's more!
With the company extremely early in its development process, sporting no sales, and having no virtually no possibility of sustained positive operating cash flow anytime soon, it also brings a going concern warning to the table. A "going concern warning" effectively means the company's current assets aren't expected to be sufficient to cover its current liabilities over the next 12 months.
If you're wondering how a clinical-stage healthcare company with no sales or products skyrockets more than 60,000% in less than six months and executes one of the largest forward splits we've witnessed this decade, your guess is as good as mine. Though borrow rates to short-sell (i.e., bet against) Regencell stock have shot into the stratosphere in recent days, overall short interest has been muted, which removes the notion of this move being propelled by a short squeeze.
More than likely, we've witnessed momentum-based risk-takers pile into what had been (prior to its 38-for-1 split) a relatively low-float stock. With more than 494 million shares now outstanding and the company's abysmal fundamental picture in plain sight, it's simply a matter of time before this fairy tale bubble implodes and shares plummet back below $1.
Caveat emptor!
