Prediction: The Most-Anticipated Stock Split of the Fourth Quarter Will Be Announced This Week

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Since this year began, the iconic Dow Jones Industrial Average, benchmark S&P 500, and innovation-propelled Nasdaq Composite have all reached multiple record-closing highs. While excitement surrounding artificial intelligence (AI) has played a key role in sending the broader market higher, stock-split euphoria has been equally important.

A stock split allows publicly traded companies to adjust their share price and outstanding share count, all while having no impact on their market cap or underlying operating performance.

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A U.S. dollar coin split in half and set atop a paper stock certificate for shares of a publicly traded company.
Image source: Getty Images.

Although there are two types of stock splits, investors tend to gravitate to one far more than the other.

The less popular of the two are reverse stock splits. This type of split is geared toward increasing a company's share price, usually to ensure that it continues to meet the minimum listing standards of a major stock exchange. Since reverse splits are often conducted by struggling businesses, they typically require a lot of extra vetting by investors.

On the other hand, investors absolutely flock to companies completing forward splits. This is the type of split that top-tier businesses undertake that makes their shares more nominally affordable for everyday investors who don't have access to fractional-share purchases with their broker. Over the last eight months, more than a dozen prominent businesses have completed a split, and all but one was of the forward variety.

A study by Bank of America Global Research found that companies conducting forward splits have more than doubled up the S&P 500 since 1980, based on returns in the 12 months following a stock-split announcement (25.4% for the splits versus 11.9% for the S&P 500).

This relatively steady outperformance for stock-split stocks is what has investors eager to guess which prominent company will be next to join this exclusive club.

With earnings season kicking into high gear, there's one market leader set to report this week that appears primed to announce a forward split.

This market leader can end October with a bang — and its first-ever stock split

Among the multitude of industry leaders spilling the beans on how well or poorly they did over the last quarter, the one worth paying closest attention to is social media goliath Meta Platforms (NASDAQ: META). The company is the parent of Facebook, Instagram, WhatsApp, Facebook Messenger, and Threads, among other sites, and it's set to unveil its third-quarter results after the closing bell on Wednesday, Oct. 30.