Stock Splits & the ETFs Impacted

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2022 is looking to be a busy year as many companies plan to conduct stock splits. A stock split doesn’t directly affect the market value of a company but it can create an opening for new investors to join the party. There are a few reasons why a stock may decide to split and the most obvious is that the price of the stock has gotten to a high enough point where a split would make it more affordable to the everyday investor which creates a new demand. Another reason is that a split can send a “message” telling investors that the price is rising, leading to potential investors looking to join in on the growth.

Now we will look at a few companies conducting stock splits and some of the ETFs they are included in.

Google (GOOGL) – Google is a leader in the digital world owning companies such as Google Search Engine, Android, and YouTube. Considered by Wall Street as a mega-cap stock, GOOGL has seen double-digit growth in revenue over the past ten years returning around 150% in the last five. With all of this growth and a share price of $2,300 it was only a matter of time before Google announced a 20-for-1 split going into effect on July 15, 2022. The split will bring GOOGL to around $115 a share, making it much more accessible. The three ETFs with the most exposure to GOOGL are: Vanguard Communication Services ETF (VOX) 11.64%, the Fidelity MSCI Communication Services Index ETF (FCOM) 11.56%, and the Communication Services Select Sector SPDR Fund (XLC) 10.87%.

DexCom (DXCM) – DexCom is a diabetes care company that specializes in creating glucose monitoring systems. DXCM has become a market leader for their G6 continuous glucose monitor (CGM) as well as DexCom One, an easier and cheaper version of the G6 CGM looking to make an impact in emerging markets like Eastern Europe. They have also announced the future launch of the G7 CGM, looking to be a smaller and more convenient version of the G6 CGM. DXCM has boosted revenues +25% year-over-year for March and is aiming to grow revenue by 15%-20% in 2022. With the future launch of the G7 CGM looking to boost sales as well as Wells Fargo raising DXCM to Overweight, it seemed like as good a time as ever for DXCM to announce a 4-for-1 stock split, increasing their share count from 200 million to 800 million. The split will go into place on June, 10 and will bring the price to around $75 a share. The three ETFs with the most exposure to DXCM are: First Trust Nasdaq Lux Digital Health Solutions ETF (EKG) 7.75%, the Global X Internet of Things ETF (SNSR) 4.92%, and the Vesper U.S. Large Cap Short-Term Reversal Strategy ETF (UTRN) 4.14%.

Tesla (TSLA) – Started in the early 2000’s, Tesla has rapidly grown to become the leading supplier in electric vehicles by a large margin with a worldwide EV market share of around 21%. TSLA has been innovating the EV market by launching 16 car models as well as revolutionizing the driving experience with autopilot, software updates, power supply, and the specifications of the cars. They have been ramping up production to keep up with demand by launching their second Gigafactory in Texas aiming to create 500,000 Model Y SUVs a year and has already delivered more than 300,000 EVs in the March quarter, up +68% year-over-year. TSLA is currently trading around $715 and has announced plans for a stock split. The split amount has not yet been disclosed but is expected to be voted on around October. The three ETFs with the most exposure to TSLA are: Consumer Discretionary Select Sector SPDR Fund (XLY) 17.27%, the Vanguard Consumer Discretionary ETF (VCR) 15.19%, and the Fidelity MSCI Consumer Discretionary Index ETF (FDIS) 13.87%.


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