We recently published a list of the 12 Stocks to Buy That May Be Splitting Soon. In this article, we are going to take a look at where Booking Holdings Inc. (NASDAQ:BKNG) stands against other stocks that may be splitting soon.
Stock splits change the number of outstanding shares of a company, but not the company’s overall value. A forward split makes each share cheaper and easier to buy. Splits can range from 2-for-1 to 100-for-1 or more. In a 2-for-1 split, one share becomes two by cutting the price in half. For instance, a $100 share becomes two $50 shares. This makes shares more affordable and attracts more investors. Even though the price per share drops, the total value held by shareholders stays the same. So, splits don’t change who controls the company. The main reason for a split is to make the stock more appealing, or accessible for retail investors.
Uncertainty is Driving Selloff
Dan Suzuki, Deputy CIO at Bernstein Advisors, joined CNBC’s ‘Squawk on the Street’ on March 14 to share his perspective on the recent persistent three-week downtrend in the indexes during an interview. He explained that the sell-off is largely driven by uncertainty and its negative impact on sentiment. According to Suzuki, analyzing market movements reveals that the stocks that rallied most after the election until mid-February have seen significant declines since then and create a mirror image effect. Additionally, the most expensive and high-beta stocks have been hit hardest as the market prices are in an uncertainty risk premium. These dynamics are central to what is driving markets currently. Despite this, Suzuki noted that hard economic data remains strong and suggests that relief from headline uncertainties could reduce the risk premium.
Suzuki noted concerns over soft retail sales and spending figures, which might be due to weather or seasonal factors. However, he highlighted resilience in weekly retail sales and strong leading indicators. Prolonged uncertainty could still impact growth. Suzuki linked consumer trends to disappointing corporate guidance and persistently high inflation, which affected sentiment. He also pointed out the wealth effect caused by a stock market decline of 10% or more, particularly for investors in crowded names. Markets are adjusting to persistent uncertainty, which will continue even with relief anticipated within the next month or two, which will prevent a return to the high multiples seen in 2020-2023.
In an uncertain market with heightened risk premiums, companies considering stock splits may need to weigh the potential benefits against the backdrop of overall market sentiment. The ongoing economic uncertainty and changes in consumer behavior might impact how companies approach decisions about stock splits, especially if they are concerned about maintaining investor confidence in a volatile market.
Methodology
We sifted through ETFs, online rankings, and internet lists to compile a list of the top stocks that were trading over $400 as of March 17. We then selected the 20 stocks with high surges in their share prices in the past 5 years and a history of stock splits. From that, we picked the top 12 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A fast-paced travel agent making a bookings for a family vacation package.
Booking Holdings Inc. (NASDAQ:BKNG)
Share Price as of March 17: $4,465.48
Surge in Share Price in 5 Years: 279.26%
Stock Split Confirmed: No
Number of Hedge Fund Holders: 99
Booking Holdings Inc. (NASDAQ:BKNG) is a global leader in online travel and restaurant reservations. Through its prominent brands like Booking.com, Priceline, Agoda, KAYAK, and OpenTable, it provides a suite of services. These include accommodation, flight, and rental car reservations, as well as restaurant bookings and related travel solutions.
The company’s Accommodation segment, primarily Booking.com, is the core of its business. Q4 2024 saw room night growth of 13% year-over-year, while full-year 2024 growth was 9% year-over-year. Alternative accommodations experienced a 19% room night increase in Q4, with listings reaching 7.9 million. Merchant gross bookings on Booking.com hit 59% of total bookings in 2024, which was up 9% year-over-year.
The Genius loyalty program’s higher tiers (Levels 2 and 3) accounted for over 30% of active travelers, who booked a mid-50s percentage of room nights. Direct bookings represented the mid-60s percentage of B2C room nights in 2024. Booking Holdings Inc. (NASDAQ:BKNG) is implementing a transformation program to achieve $400-450 million in annual cost reductions. It’s reinvesting $170 million in strategic areas like GenAI and fintech.
Cooper Investors Global Equities Fund stated the following regarding Booking Holdings Inc. (NASDAQ:BKNG) in its Q4 2024 investor letter:
“The largest contributors to returns were Booking Holdings Inc. (NASDAQ:BKNG) and Liberty Formula One (FWONK). BKNG is the leading global travel platform (larger than Airbnb and Expedia combined on an annual room nights booked basis). Operating trends continue to be strong driven by tailwinds from global travel demand and new CFO Ewout Steenbergen finding cost efficiencies following a period of investment. This resulted in third quarter revenue growth of 9% driving Earnings Per Share growth of 16%, a run rate we believe is now sustainable for the business. BKNG has been a highly successful investment, delivering returns of 130% since our first investment in December 2022. But going forward we see less value latency and have consequently begun to redeploy capital into more compelling opportunities.”
Overall, BKNG ranks 3rd on our list of the stocks that may be splitting soon. While we acknowledge the growth potential of BKNG as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than BKNG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
