When stocks trade at high prices, there is a potential for a stock split. Micron Technology (MU -1.02%) has a share price of over $1,000 and has risen to more than $1,200 earlier this year. It could conceivably do a 10-for-1 split and still be priced at over $100, which may be more attractive to investors.
Is Micron likely to split its stock before the end of the year? Here's what I think will happen.
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Micron probably won't do a stock split
Micron has split its stock three times in its history, with the most recent one being all the way back in early 2000, when it did a 2-for-1 split.
Ultimately, there's no rule that a stock has to split, or that it will. Some never do, some frequently do. It comes down to management.
What's important to note, however, is that a stock split doesn't affect an investor's position in a company. They simply would own more shares at a lower price, but the overall investment would remain unchanged. If someone had an investment worth $5,000 before the split, it would still be worth $5,000 immediately after the split. There would simply be a change in the share count and stock price.
I don't think Micron will do a stock split this year due to the potential for volatility in its share price. It has skyrocketed by more than 1,400% in five years, but it could fall significantly if investors worry that the memory shortage will end soon. A stock that's rallied so much would have significant downside risk.
Meanwhile, if the company were to do a stock split, it could end up going even lower in price during a sell-off. If management wants to do a split, it's likely with a price in mind, but given the potential for volatility in Micron's stock, it can be difficult to predict where it might end up trading. Thus, I don't think it's probable.
NASDAQ: MU
Key Data Points
Is Micron's stock worth buying before 2026 comes to a close?
Year to date, Micron's stock has soared by around 270%. And at about $1.2 trillion, it has become one of the most valuable stocks on the U.S. markets. Its valuation has climbed significantly, but given the business's tremendous growth, it may not appear expensive relative to earnings. However, if investors worry that the memory shortage may end sooner than expected, that would likely weigh on the stock's valuation.
While Micron has been a great buy in recent years, I would hold off on buying it right now, as the tech stock may be running out of room to rise higher.
