Stock splits have enjoyed a resurgence in popularity in recent years. The widespread adoption of artificial intelligence (AI), growing corporate profit, and expectations of further interest rate cuts by the Federal Reserve have combined to drive stock prices to new heights. This situation, in turn, has sparked a renaissance in stock splits. A company will normally take this step when years of rapid growth and strong financial results have fueled a commensurate increase in its stock price, putting it out of reach of everyday investors.
There's another reason investors gravitate toward stock splits. The strong business and financial results that gave rise to the stock split generally continue. Research shows that companies that conduct a stock split return 25%, on average, in the year following the announcement, more than double the 12% average return for the S&P 500, according to data compiled by Bank of America analyst Jared Woodard.
While there are plenty of stocks that might make the grade, I predict Meta Platforms (META 2.52%) will be the most prominent stock split of 2026. Read on to find out why.
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Unparalleled reach
First off, Meta Platforms has one of the most formidable user bases in the world. It is the parent of several well-known social media sites, including Facebook, Instagram, WhatsApp, Messenger, and Threads, which collectively reach more than 3.5 billion users each day, with more signing up each quarter. This lineup gives Meta an unparalleled reach coveted by advertisers looking to target its vast audience.
Yet it's the company's treasure trove of user data that may be Meta's most valuable asset. This data helps the company surface more relevant content and informs its digital advertising. The posts, photos, messages, videos, and reactions provide vital clues that help Meta connect its intended audience with the most relevant targeted advertising.
This wellspring of data and unrivaled reach has made Meta the world's No. 2 digital advertiser, behind only Alphabet's Google. This position has fueled strong financial results for the social media maven. In the third quarter, Meta's revenue of $51.2 billion jumped 26% year over year, while adjusted earnings per share climbed to $7.25, a 20% increase.
A large and growing market
Meta's ever-growing audience aside, there are other growth drivers. Worldwide ad spending is expected to increase by roughly 5% and surpass $1 trillion for the first time in 2026, according to ad agency Dentsu. Social media is expected to be one of the fastest-growing digital advertising segments, forecast to grow 16% over the coming year.
I'd be remiss if I didn't mention Meta's advances in the field of AI. The company leveraged its aforementioned treasure trove of data to create Llama, the world's leading open-source AI. This suite of advanced large language models has evolved to provide Meta with a strong competitive edge.
Meta's AI is "delivering higher quality and more relevant content," according the the company. Engagement is on the rise, as users spent 5% more time on Facebook and 10% more on Threads in Q3. There's a direct correlation between higher engagement and increasing advertising revenue, as illustrated by Meta's average price per ad, which rose 10%.
NASDAQ: META
Key Data Points
Why Meta is a prime stock split candidate
There's no denying that Meta has been a market-beating stock. Over the past decade, the company's revenue has soared 852%, driving its adjusted net income up 959%. Those blockbuster financial results have fueled an equally impressive increase in Meta's stock price, which has surged 535% as of this writing. In fact, since going public in 2012, Meta stock has risen 1,550% from its $38 IPO price. Yet it's the only "Magnificent Seven" stock that has never conducted a stock split.
While the company hasn't made an official announcement, with a current share price above $600, Meta appears to be a prime candidate for a stock split, especially given that many of its peers have already done so.
That said, investors shouldn't buy Meta stock simply because it might split its shares -- but there are plenty of other reasons. One of the most compelling might be the stock's valuation. Meta currently sells for less than 28 times earnings, the lowest among its Magnificent Seven peers, and lower than the average multiple of 31 for the S&P 500.
Its consistent track record of growth, industry dominance, and attractive valuation combine to make a compelling case that Meta is a buy now ahead of a widely anticipated stock split.
