Stock-Split History Is Being Made Next Week by an Industry-Leading Company That's Gained 400% in Just Over 5 Years

Yahoo

13-06-2025

Investors have rallied around influential companies conducting splits.
To date, two industrial titans -- one of which has risen more than 210,000% since its initial public offering -- have completed forward stock splits.
Next week, a high-flying financial stock, whose key performance indicators are rocketing higher across the board, will become Wall Street's newest stock-split stock.
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For more than three decades, investors have almost always had a next-big-thing trend or innovation to hold their attention. It started with the advent and proliferation of the internet in the mid-1990s and was followed by genome decoding, business-to-business e-commerce, nanotechnology, 3D printing, blockchain technology, cannabis, and the metaverse. Today, artificial intelligence (AI) is captivating the attention and wallets of professional and everyday investors.
But every so often, more than one big trend can exist at the same time. In addition to the evolution of AI, investors have been rallying around influential companies announcing stock splits.
A stock split is a tool publicly traded companies can lean on to cosmetically alter their share price and outstanding share count by the same factor. These adjustments are considered cosmetic because they don't result in a change to a company's market cap or its underlying operating performance.
Although stock splits can nominally adjust a company's share price in either direction, one is overwhelmingly preferred by the investing community.
Reverse splits, which are designed to increase a company's share price while correspondingly reducing its outstanding share count, are often avoided by investors. The companies announcing and completing reverse splits are typically struggling and attempting to avoid delisting from a major U.S. stock exchange.
On the other hand, investors are willingly lured by businesses conducting forward splits. This type of split lowers a company's share price to make it more nominally affordable for everyday investors and/or employees who aren't able to purchase fractional shares. Forward splits are typically completed by companies on the leading edge of the innovation curve within their respective industry.
Furthermore, an analysis from Bank of America Global Research showed that, since 1980, companies enacting forward splits more than doubled the average return of the benchmark S&P 500 in the 12 months following their split announcement (25.4% vs. 11.9%).
To date, two influential stock-split stocks have taken center stage. Next week, the Class of 2025 stock-split stocks will welcome a new member.
Last year, more than a dozen high-profile businesses completed a split, with many of these companies being traced back to the tech sector. This included Nvidia's much-anticipated 10-for-1 split, as well as AI networking solutions specialist Broadcom's first-ever split (also 10-for-1).
This year's stock-split theme is all about non-tech titans making their shares more accessible to everyday investors.
Although it was the last of the three companies to announce its intent to split, wholesale industrial and construction supplies company Fastenal (NASDAQ: FAST) became the first notable business to complete its forward split (2-for-1) after the close of trading on May 21. This marked its ninth split in the last 37 years.
Shares of Fastenal have rocketed higher by well over 210,000% since its initial public offering in 1987 (including dividends) and are reflective of the company becoming increasingly tied to the supply chains of notable industrial and construction companies. Fastenal has been integrating its managed inventory solutions on-site to generate instant revenue, as well as gain a better understanding of the supply chain needs of its leading customers.
Furthermore, Fastenal benefits from the nonlinearity of economic cycles. Though recessions are a normal and inevitable part of the economic cycle, they're historically short-lived. In comparison, the average economic expansion since the end of World War II has endured around five years. A cyclically tied company like Fastenal spends a disproportionate amount of time growing in lockstep with its biggest clients.
The other big-time stock split that's been announced and completed is auto parts supplier O'Reilly Automotive (NASDAQ: ORLY). Following the approval of its forward split by shareholders in mid-May, O'Reilly completed its largest-ever split, 15-for-1, after the close of trading on June 9.
One of the clear-cut catalysts for O'Reilly and its peers is the steady aging of cars and light trucks on American roadways. Whereas the average age of vehicles in the U.S. stood at 11.1 years in 2012, according to a report by S&P Global Mobility, it's increased to an all-time high of 12.8 years, as of 2025. With auto loan interest rates climbing and President Donald Trump's tariff and trade policy leading to confusion, O'Reilly Automotive should be relied on by drivers and mechanics to keep aging vehicles in tip-top running condition.
A more company-specific reason O'Reilly Automotive stock has steadily climbed is its sensational share-repurchase program. Since initiating a buyback program in 2011, more than $25.9 billion has been spent to repurchase close to 60% of its outstanding shares. A company that regularly grows its net income and reduces its outstanding share count should enjoy a boost to its earnings per share.
Wall Street's third high-profile, non-tech, industry-leading stock split of 2025 is right around the corner.
Automated electronic brokerage firm Interactive Brokers Group (NASDAQ: IBKR) announced on April 24 that it would complete a 4-for-1 forward split following the close of trading on June 17. This split, which is historic in the sense that it's the first in the company's history, will reduce its share price from north of $205, as of this writing on June 10, to around $50 per share.
Since the start of May 2020, which represents a period of just over five years, shares of Interactive Brokers have soared by 400%. This advance is a function of macro and company-specific factors working in its favor.
The broad-based theme that helps Interactive Brokers succeed is long-lasting bull markets. Even though stock market corrections and periods of outsized volatility offer some of the best investment opportunities, customers at Interactive Brokers tend to be more willing to trade and hold additional equity on the platform when stocks are climbing. With the exception of the 2022 bear market, which endured less than a year, and the short-lived tariff-induced swoon in April 2025, the bulls have been running wild on Wall Street for the last five years.
Interactive Brokers' site features have also hit home with its clients. The company's heavy reliance on technology and automation allows it to pay higher interest on cash balances, as well as charge lower margin fees, depending on the amount being borrowed.
This combination of enduring bull markets and unique features has led to sweeping growth in virtually all of Interactive Brokers Group's key performance indicators (KPIs). Over the trailing-two-year period, ended March 31, 2025, the number of customer accounts has soared by 65% to 3.62 million, customer equity on the platform has risen by 67% to almost $574 billion, and daily average revenue trades -- total customer orders divided by the number of trading days in a period -- has jumped 72% to 3.52 million.
In other words, when investors feel confident about the state of the stock market, they open accounts, trade more frequently, use margin more often, and keep more of their capital tied up with Interactive Brokers' platform.
The only knock you'll find against owning Interactive Brokers' stock is that its forward price-to-earnings (P/E) ratio of 26 represents a 29% premium to its average forward P/E over the trailing-five-year period. Though this likely isn't a big deal for long-term investors, considering the company's KPIs keep heading in the right direction, it might limit upside for its shares in the coming quarters.
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Bank of America is an advertising partner of Motley Fool Money. Sean Williams has positions in Bank of America. The Motley Fool has positions in and recommends Bank of America, Interactive Brokers Group, and Nvidia. The Motley Fool recommends Broadcom and recommends the following options: long January 2027 $175 calls on Interactive Brokers Group and short January 2027 $185 calls on Interactive Brokers Group. The Motley Fool has a disclosure policy.
Stock-Split History Is Being Made Next Week by an Industry-Leading Company That's Gained 400% in Just Over 5 Years was originally published by The Motley Fool