Facebook Stock Splits History and Future

Facebook's stock split history began in 2014, when the company split its shares 3-for-1, increasing the number of outstanding shares from 2.3 billion to 6.9 billion.

This move made Facebook's stock more accessible to individual investors, who could now buy smaller pieces of the company.

The 3-for-1 split was a significant event, but it wasn't the only one in Facebook's history.

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Facebook's history of stock splits is a significant aspect of its growth and development. Facebook shareholders approved their first stock split on June 20, 2016.

Facebook issued 5.7 billion shares of its newly created Class C stock as part of the split. The company's first stock split had a split ratio of 3 for 1.

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Meta Platforms is now the only "Magnificent Seven" stock to never have done a stock split in its history, and its peers except for Microsoft have all done one in recent years.

The company hasn't given any indication that it would split its stock, but doing so would likely please shareholders. Apple, for example, did a 4-for-1 stock split on August 28, 2020.

A stock split would perhaps boost the stock very briefly, but Meta Platforms' stock is surging to record highs and really doesn't need an artificial short-term boost from that type of announcement.

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Meta Platforms has a share price that's now approaching $600 a share, which is one of the highest share prices of any stock on the S&P 500 index.

The company hasn't given any indication that it would split its stock, but doing so would likely please shareholders.

Meta's CEO, Mark Zuckerberg, has a long-term mindset, which might influence his decision on a stock split. He may choose not to split shares as he thinks it attracts investors who aren't aligned with the company's long-term vision.

A stock split would perhaps boost the stock very briefly, but Meta's stock is already surging to record highs, so it doesn't need an artificial short-term boost from that type of announcement.

The company hasn't split its shares after 14 years on the public markets, and it's not desperate to join the Dow Jones index, which might be another reason against a stock split.

Meta's recent growth, with revenue up 19% to $40.6 billion and operating income jumped 26% to $17.4 billion, shows the company continues to expand its operating margin.

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Meta employees receive restricted stock units (RSUs) in addition to their ordinary cash paychecks. These units convert into regular shares over time.

The RSU program gives Meta granular control over its total wages at current stock prices. This means the company can manage its compensation costs even when the stock price is high.

To be included in the Dow Jones Industrial Average market index, Meta would need to split its stock. This is because the index is price-weighted, giving high-priced components more influence over the total index value.

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A stock split simply changes the number of shares that represent a company's total market value.

This change doesn't add or destroy value for existing shareholders, it's just a reorganization of the same amount of value.

For example, 10 million shares worth $100 each adds up to a $1 billion market capitalization, which is the same as 100 million shares priced at $10 per share.

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A lower share price can make the stock more accessible to investors with modest budgets, especially if they don't have a brokerage account that supports buying or selling a fraction of a full share.

This is important because high stock prices can make it difficult for people to buy or sell stock options, which are contracts that represent the right to buy or sell a certain number of shares at a specific price.

For instance, an "in the money" call option contract for Meta stock is worth about $56,500 today, which is a significant amount of money that can be a barrier for many people.

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Facebook's stock split may seem exciting, but let's take a closer look at its implications for investors.

After the split, Facebook will join a number of companies with multiple share classes, including both voting and non-voting shares.

Interestingly, some of these companies have seen a premium for voting shares, even though the votes don't give investors enough control to make a difference.

The same will be true of Facebook, where the votes won't be close to enough to control the company's affairs.

This raises questions about whether the idea is good for investors.

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