Prices involve a lot of psychology. That's why retailers roll out 3-for-1 discounts, promote offers to buy one get one free, and round prices down to end in 99 cents.
Similarly, a high-priced stock can dampen an investor's enthusiasm. After all, would you rather have five shares of a stock, each worth $100, or half a share that is worth $500? I think most people would choose the former.
With that in mind, let's examine a few high-priced stocks that investors are hoping will execute a stock split in 2025.
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Fair Issac
When I put together a similar list of anticipated stock splits one year ago, Fair Issac (FICO -2.01%) was at the top of my list. And while my other two choices (Nvidia and Chipotle Mexican Grill) did split their shares in 2024, Fair Issac didn't. Nevertheless, it turned in a fantastic year, as its shares have rallied almost 80% as of this writing.
However, that leaves Fair Issac shares priced at more than $2,000 a share. The company's most recent stock split came more than 20 years ago, and at this point, the company could easily perform a significant split, perhaps as much as a 20-to-1, bringing its share price down to around $100 a share.
At any rate, investors should keep an eye on this credit rating juggernaut. With its asset-light business model, the company generates excellent profitability, with gross margins around 80% and operating margins above 43%. Moreover, Fair Issac has steadily grown its revenue from $1.2 billion to $1.7 billion over the last five years, representing yearly growth of about 8%.
In other words, this under-the-radar financial mainstay is an excellent business, stock split or not.
Netflix
A few years ago, another stock split seemed out of the question for Netflix (NFLX -0.75%). Shares tumbled nearly 75% in the first half of 2022, bottoming near $166.
Yet, since then, the company and its stock have come roaring back. Shares have recently crossed the $900 mark, as revenue and profits have reached all-time highs. That has investors wondering whether the company might announce its first stock split since 2015. I think Netflix will announce a stock split, perhaps as much as a 10-for-1 split at some point in 2025.
Meanwhile, the company remains a solid investment. The addition of an advertising tier, along with the company's crackdown on password sharing, has pushed Netflix's operating margin to an all-time high of 25.7%.
NFLX Operating Margin (TTM) data by YCharts
What's more, the company has emerged as the big winner in the streaming wars. According to November data provided by Nielsen, streaming video now accounts for over 41% of all viewing hours. And of that 41%, Netflix now accounts for 7.7% of all streaming hours, trailing only YouTube (10.8%). Meanwhile, key Netflix competitors like Amazon's Prime Video (3.7%), Hulu (2.9%), and Disney+ (1.9%) remain way behind.
As a result, Netflix's stock could continue surging in 2025 -- and perhaps make a stock split even more likely.
Tesla
Finally, there's Tesla (TSLA -1.76%).
It was a mostly lackluster year for Tesla shares -- until Election Day. Yet, once Donald Trump was named the winner of the election, Tesla shares skyrocketed, thanks to Elon Musk's close ties to the incoming president.
As of this writing, Tesla shares are priced at over $450 a share, making them ripe for a potential stock split in 2025. Tesla's most recent stock split was a 3-for-1 split carried out in 2022. When that stock split was first announced in June 2022, shares were trading around $700. Therefore, it's possible the company might consider a 2-for-1 split if shares were to reach and hold the $500 level in 2025.
In any event, investors may want to consider Tesla for a few reasons. Obviously, the stock has gotten a bump thanks to Musk's key role within the incoming Trump administration, but there are other reasons, too. The company appears close to deploying some form of autonomous driving along with robotaxis in Austin, Texas. It's another sign that the company may be about to unlock new value propositions that Tesla investors have long hoped for.
In addition, some analysts are even more excited by the company's humanoid robot, Optimus. Given recent advancements in artificial intelligence technology, humanoid robots could soon become mainstays in any number of labor-intensive jobs. That presents another potentially lucrative market for Tesla to explore in the coming years.
Tesla stock is once again approaching levels at which a stock split is plausible. And even more importantly, the company appears to be firing on all cylinders.
