Micron's (MU +3.50%) scorching hot run isn't over yet.
The memory chip stock jumped 19.3% on Tuesday after UBS lifted its price target to $1,650 on the stock, more than double from where it was trading before the hike. Micron has now topped $1 trillion in market value, putting it in an elite stock club along with the "Magnificent Seven" and chip stock peers like Broadcom and Taiwan Semiconductor.
The stock added to those gains on Wednesday, topping $900 per share, and nearly eclipsed $1,000 for the first time in pre-market trading, making its individual shares among the highest-priced on the market.
At this point, with the stock continuing to soar, investors are likely wondering if a stock split is in its future. It's a good question. Let's take a look at what the prospects are for a Micron stock split.
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Micron's stock split history
Micron hasn't split its stock since the dot-com era. The company has issued three stock splits in its history as follows.
| Date | Split |
|---|---|
| 5/2/2000 | 2-for-1 |
| 5/23/1995 | 2-for-1 |
| 4/19/1994 | 5-for-2 |
If you had one share before 1994, then you would have 10 shares after the splits.
The pause in stock splits following the dot-com bubble bursting with other tech stocks as splits were common during the dot-com era, though the collapse seemed to chasten companies away from it.
However, as Micron approaches $1,000 a share, the case for a stock split is getting stronger, as its share price has never been higher before.
Why a Micron stock split makes sense
Stock splits don't change the fundamentals of a stock. It's just splitting the pie into more pieces, but they can affect the stock in other ways, and investors generally respond favorably to them.
First, they act as a sign that management expects the stock to go higher. After all, companies control the timing of stock splits, and it only makes sense to do them if management expects the stock to go higher.
Micron has a lot of bullish momentum at the moment. In fact, the stock jumped nearly 20% just on a price target hike to $1,650, implying that when it was issued, the stock could double. Micron said its results are expected to continue to soar with revenue jumping 194% this fiscal year to $110 billion and climbing another 58% in fiscal 2027, according to the analyst consensus.
In recent quarters, the company has trounced estimates, and management hinted that would continue when it reports earnings in June, as it recently said that its financial performance has improved since its previous earnings call and that demand continues to outstrip supply.
A stock split from the company would likely send the stock soaring, and with the share price already above $900, doing a 5-for-1 or even a 10-for-1 split would be reasonable. Doing so would make the stock more accessible to retail investors and send a signal of confidence from management.
NASDAQ: MU
Key Data Points
Will it happen?
Stock splits are difficult to predict as the decision to do so is completely in the hands of management. Memory chip stocks are notoriously cyclical, which may be one reason why the company would hold off on a split. If supply/demand dynamics change, the stock could crash as profits would likely come down sharply. However, there's no sign of that happening, and CEO Sanjay Mehrotra said the company is only able to meet about 60% of demand.
There's no reason for Micron management to rush into the decision, but if the stock continues to move higher, calls for a split will grow louder.
