Chipmaker Broadcom released its latest earnings report on Wednesday, which beat expectations and sent share prices soaring. It also announced a 10-for-1 stock split, which will begin trading on a split-adjusted basis on July 15.
“We are announcing a 10-for-one forward stock split of Broadcom’s common stock, to make ownership of Broadcom stock more accessible to investors and employees,” said Kirsten Spears, Broadcom’s CFO, in comments included with the company’s earnings release. The stock split announcement accompanied some impressive earnings figures, too: Broadcom’s revenue tallied nearly $12.5 billion (up 43% year-over-year), and $2.12 billion in net income for the quarter.
That growth comes largely due to the AI boom, as companies look to beef up their devices with AI applications and capabilities.
As for the stock split, the company says that it decided to split its stock as its share prices have increased significantly. As of midday Thursday, shares were trading at nearly $1,700, and were up more than 13% since the markets opened Thursday morning. Year-to-date, share prices are up more than 56%, and have almost doubled over the past calendar year.
As for how the split will work, the company released an FAQ document that says when the market opens on July 15, “the stock price per share is expected to be reduced to one/10th of the pre‐split value, while the number of shares outstanding will be increased to ten times the number of shares outstanding pre‐split.” Effectively, the company is creating more shares without diluting shareholders’ equity—so, following the stock split, there will be ten times more Broadcom shares on the market than before. Shareholders with one Broadcom share today will have 10 shares on July 15.
Broadcom’s stock split announcement also comes on the heels of a similar move by fellow chipmaker Nvidia, which also split its stock 10-to-1 on June 7. Nvidia’s stock split helped make its stock more attractive to investors who may have been put off by its high share prices—the same logic that Broadcom is utilizing, too.