Broadcom Stock Split 2024: What Will Happen to the AVGO Price?

Will Broadcom Stock Split in 2024?

Yes. Broadcom (AVGO) carried out a 10-for-one forward stock split after the market closed on Friday, July 12, 2024, having unveiled the plan as part of its second-quarter results.

The chipmaker became the latest company to make such a move because its stock price has soared almost 500% over the past five years.

This resulted in the AVGO stock price effectively dropping by 90% from $1,700.67 to $169.93 as trading began on Monday morning, July 15.

Here, we look at the reasons behind this decision, examine the Broadcom stock split history, and learn what is likely to happen to the AVGO stock price.

Table of Contents Table of Contents

1. Will Broadcom Stock Split in 2024?
2. Key Takeaways
3. When Is the Next Broadcom Stock Split?
4. What to Expect From Broadcom Stock Split in 2024?
5. Broadcom Stock Split History
6. Will Broadcom Stock Split Benefit Investors?
7. How Does Broadcom Stock Split Impact the Market?
8. What Is a Stock Split?
9. The Bottom Line
10. FAQs
11. References

Show Full Guide

Table of Contents

1. Will Broadcom Stock Split in 2024?
2. Key Takeaways
3. When Is the Next Broadcom Stock Split?
Show Full Guide
4. What to Expect From Broadcom Stock Split in 2024?
5. Broadcom Stock Split History
6. Will Broadcom Stock Split Benefit Investors?
7. How Does Broadcom Stock Split Impact the Market?
8. What Is a Stock Split?
9. The Bottom Line
10. FAQs
11. References

When Is the Next Broadcom Stock Split?

A 10-for-one stock split has just taken place. Broadcom stock split rumors had been confirmed by the company’s management a month earlier.

In June, as Broadcom published its second-quarter results, the company announced its intention to carry out a 10-for-one forward stock split.

In a statement, Kirsten Spears, the company’s chief financial officer, said the move would make ownership of Broadcom stock more accessible to investors and employees.

“Our stockholders of record after the close of market on July 11, 2024 will receive an additional nine shares of common stock for each share held after the close of market on July 12, 2024.”

So, will Broadcom stock split again? That is obviously unlikely in the very short term unless the AVGO stock price rises at a staggering rate, but future splits can’t be ruled out.

What to Expect From Broadcom Stock Split in 2024?

However, investors can relax as the split doesn’t affect the value of the company or their holding in the stock.

Both of these valuations remain exactly the same as they were before the split. Broadcom is still the 12th largest company in the world by virtue of its $791.64 billion market capitalization.

The only change is that the shareholders of record on Thursday, July 11, 2024, will have received an additional nine shares on the following day for every existing one they held.

One question concerns what is likely to happen to the company in the wake of the Broadcom stock split in 2024.

Wall Street analysts remain optimistic about Broadcom’s prospects. AVGO stock is rated a ‘moderate buy’, according to the views of 28 analysts compiled by MarketBeat.

The consensus view is that the stock will be trading at $170.64 in a year’s time, although predictions range from just $4.40 to $240.

In mid-June 2024, William Kerwin, equity analyst at Morningstar, increased his fair value estimate for Broadcom to $1,550 per share. After the split, this has been adjusted to $155.

“We continue to see Broadcom as incredibly well-positioned to benefit from rising generative AI investment in the long term,” he wrote. “It is the second-largest global accelerator vendor behind Nvidia in terms of its custom chip business.”

Broadcom Stock Split History

The Broadcom stock split history is not that straightforward as it all depends on which version of the company is being discussed.

Technically, it’s the first split, as there hasn’t been one since Avago Technologies acquired Broadcom for $37 billion back in February 2016.

However, the company had previously split in 1999, 2000, and 2006 when it was trading under its old ticker of BRCM.

How Many Times Has Broadcom Stock Split?

The question as to how many times has Broadcom stock split depends on whether you’re including the company’s history before it was bought by Avago Technologies.

If you are, then the answer is three times, with the most recent being the fourth in the company’s combined history.

BRCM first divided its stock on February 18, 1999. This was a two-for-one split. The next one came a year later, on February 14, 2000, and was another two-for-one split.

Broadcom’s last stock split took place on February 22, 2006. This was a three-for-two split.

You can see the dates in our Broadcom stock split history graph.

Will Broadcom Stock Split Benefit Investors?

It won’t have any real impact on existing investors. However, it will make AVGO stock more affordable for would-be shareholders.

In theory, the more people who can afford to buy Broadcom shares, the bigger the pool of potential investors.

While the share prices of companies that undergo stock splits will initially fall, the increase in interest could end up pushing up their value.

Of course, there are no guarantees. The AVGO stock price is much more likely to be influenced by the opinions of investors about the company’s future prospects.

Industry observers reflect these views in their Broadcom stock split predictions.

William Kerwin, equity analyst at Morningstar, said:

“Broadcom’s stock split won’t affect our fundamental valuation on the company, but it makes it more easily accessible to smaller investors.”

How Does Broadcom Stock Split Impact the Market?

Stock splits have been positive moves for companies since 1980, according to research carried out by the Bank of America.

Its strategists found that stocks announcing splits have significantly outperformed the S&P 500 over the following three, six, and 12-month periods.

They pointed out that these stocks have gained, on average, 25% over the next 12 months, compared with a gain of 9% for the benchmark index.

What Is a Stock Split?

A stock split is when a company divides its existing high-value shares into a larger number of shares with a lower value.

The reason for a stock split is often to make the shares more affordable for a wider number of potential investors and company employees.

Why Are They Important to Investors?

A stock split makes shares more affordable for investors. After all, paying well in excess of $1,000 for a share is out of reach for most people.

Splitting the stock also means that employees have a greater opportunity to own shares in the company, whether they’re buying them or being awarded as part of their benefits packages.

By increasing the number of shares in issue tenfold, the value of each share will fall by 90%, explained Dan Coatsworth, investment analyst at AJ Bell.

“Playing around with the share price by making technical adjustments is a psychological trick,” he explained. “It’s a classic technique that has been adopted by Apple (AAPL) and Tesla (TSLA), among others, many times over the years.”

The Bottom Line

Broadcom’s share price has soared over the past five years, so it was no real surprise that its management decided to split the stock.

The remarkable rise, which is fuelled by the potential benefit of being associated with the AI boom, has seen shares rise in value by more than 200% over the past two years.

However, a stock split doesn’t automatically make the company a wise investment. This will all depend on the longer-term prospects for the business.

FAQs