A stock splitting its shares is generally a positive sign that the company (and its stock) is doing well. Splits don’t change the actual value of an investor’s holdings in a company, they just divide the holding into smaller pieces. But at a lower price point, a stock may become more accessible and attractive to a wider pool of investors. It’s also indicative of a stock’s success; stocks that split their shares normally do so because their prices are high.
However, not doing a stock split doesn’t necessarily mean a stock has been doing poorly. Costco Wholesale (NASDAQ: COST) stock currently trades around the $700 mark. The company could easily split its shares and still be priced fairly high.
Is a stock split likely for Costco in 2024?
Costco’s last stock split was in 2000
The last time Costco management enacted a stock split was back in early 2000 when the warehouse club retailer split shares on a 2-for-1 basis. There were a few other splits in the 1990s, but nothing in more than two decades.
If the company were to execute a stock split this year, it would likely split by even more than just 2-for-1, as that would still put the stock at a relatively high price of $350. A 7-for-1 split, for instance, would put it at around the $100 mark. There are no hard and fast rules about what the resulting share price should be from a split, but a look at splits by other companies in the past several years indicates that aiming for $100 a share is popular.
A high stock price doesn’t mean a split is inevitable
While Costco is among the highest-priced stocks on the S&P 500, there are stocks even higher priced that haven’t done stock splits. Shares of Chipotle Mexican Grill trade at more than $2,300, while homebuilder NVR has a stock price of more than $7,400. A high price alone isn’t enough of a reason to suggest that a stock split is inevitable. Neither Chipotle Mexican Grill nor NVR has ever completed stock splits in their history.
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