Stock-Split Watch: Is ASML Next?

Key Points

• A forward stock split would lower ASML's hefty share price.

• The tech company hasn't seen the kind of rapid growth that often happens before a stock split.

• Despite mixed results lately, ASML plays a crucial role in semiconductor manufacturing.

• 10 stocks we like better than ASML ›

Artificial intelligence (AI) companies dominate the top of the stock market. Netherlands-based ASML Holding (NASDAQ: ASML) isn't as well-known as the big names, but it serves a crucial role, providing the lithography equipment needed to make semiconductors.

One potential hang-up for investors on a budget is the share price. It's trading at about $780 (as of Sept. 5), so even picking up a few shares costs thousands of dollars. A stock split would lower the price and make ASML more accessible. Let's see if that's likely to happen anytime soon.

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Image source: ASML Holding.

The logic behind stock splits

There are two types of stock splits: forward stock splits and reverse stock splits. Both are ways for companies to adjust their share prices and number of outstanding shares, just in different directions.

With a forward stock split, a company divides its stock. For example, in a 5-for-1 forward split, the company would increase its shares fivefold. If you owned 10 shares before the stock split, you'd own 50 shares after. The total value of those shares remains the same. There's no impact on the value of the company or shareholder investments, but a stock split can attract new investors by making shares more affordable.

A reverse stock split reduces the number of outstanding shares and increases the share price. The typical reason that companies do this is because they're at risk of being delisted by a stock exchange for not meeting the share price minimum, which is a bad sign for investors. Considering ASML's current share price, we can rule out a reverse split.

ASML's previous stock splits

Over three decades as a public company, ASML has conducted five stock splits. Here's when it carried out those stock splits and the details on each one:

• May 12, 1997: 2-for-1 forward split
• May 8, 1998: 2-for-1 forward split
• April 17, 2000: 3-for-1 forward split
• Oct. 1, 2007: 8-for-9 reverse split
• Nov. 29, 2012: 77-for-100 reverse split

It's worth noting that ASML's reverse stock splits weren't related to the possibility of being delisted. ASML was distributing cash to shareholders and consolidating outstanding shares.

While ASML executed stock splits fairly frequently during its early years, it has now been over 25 years since it has done a forward split. The share price is significantly higher than it was in 2000. Its split-adjusted price was $109 the day before the 3-for-1 split, and then $36.30 on the next trading day.

Will ASML split its stock?

If you just look at ASML's share price, it seems like a prime candidate for a stock split. However, it's missing one key ingredient normally seen with companies that split their stocks -- the price hasn't been climbing higher and higher. Since hitting an all-time high of $1,086 on July 10, 2024, ASML has lost 28% of its value.

Stock splits often happen when a company has a lot of positive momentum behind it. A lower share price can help attract people who want to invest in a hot company but don't want to spend too much money on a single share. I wouldn't consider ASML a hot company right now. Management has been conservative with earnings expectations as it weighs the potential impact of tariffs (although a federal court has ruled most tariffs illegal, pending an appeal by the Trump administration). In addition, export restrictions limit the types of machines ASML can sell in China.

Despite those headwinds, ASML is still an important tech business that is instrumental in the growth of AI. It also has a monopoly on the extreme ultraviolet (EUV) lithography machines used in manufacturing advanced AI semiconductors. If you're looking for top AI stocks, ASML is worth considering, but I wouldn't recommend waiting for a stock split. This company will probably only split its stock if the price explodes. And if that happens, you'll wish you had invested before the split.

Should you invest $1,000 in ASML right now?

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Lyle Daly has positions in ASML. The Motley Fool has positions in and recommends ASML. The Motley Fool has a disclosure policy.