Super Micro Computer (NASDAQ: SMCI) had quite a run in the public markets. It debuted at $8 per share in March 2007 but since rocketed much higher, and is now trading around $1,100 per share.
Because Super Micro Computer (often called Supermicro) has never split its stock, many are beginning to wonder if a split is inevitable. So, is there a stock split in the cards for Supermicro soon?
Supermicro’s stock run has been impressive
While Supermicro’s stock has risen over 13,000% since its IPO, the lion’s share has come in the past few years. From its debut in 2007 to the start of 2020, Supermicro’s stock only rose 174%, easily trailing the market (up 198% during that time).
It performed slightly better from 2022 to mid-2022, with the stock rising 63%. But the real performance started after that point. From mid-2022 on, the stock rose nearly 3,000%, all thanks to one trend: artificial intelligence (AI).
Super Micro Computer’s primary product is its powerful servers, which can be equipped to provide vast amounts of computing power for tasks like engineering simulations, drug discovery, and AI model training. What separates Supermicro from competitors is its highly configurable models, as the company is willing to work with each customer to ensure they get exactly what they want.
As more companies raced to build out their computing power with the rise of data-heavy tasks like AI model training, Supermicro stood to benefit.
While it didn’t see the initial wave of growth Nvidia saw in 2023, it is now starting to see the demand. This makes perfect sense, as Nvidia must provide its GPUs to Supermicro before they can sell the data center product.
In Q2 FY 2024 (ending December 31), Supermicro’s growth began to tip the scales, much like Nvidia did in 2023. Its revenue rose 103% year over year, and management gave guidance for 188% to 219% growth for Q3. Because the market didn’t want to miss a meteoric rise like Nvidia again, investors piled into Supermicro’s stock, causing it to rise more than 300% in 2024 alone.
Now that it has crossed the $1,000 threshold, it’s in prime territory for a stock split.
A stock split may be on the horizon
Because a stock split affects shareholders, it must be voted upon. While a company can call a special vote whenever it deems necessary, it’s more common for companies to do it during an annual meeting when they vote on other items like board of director appointees, pay packages, or which accounting firm audits them.
In 2023, that meeting was held on May 19. But the propositions and voting occur much earlier than that. Last year the voting materials were distributed on April 14, so an announcement on a stock split could be coming shortly so shareholders can vote on it.
But if it doesn’t, investors shouldn’t be worried. Many U.S. investors have access to fractional shares through various brokers, so even if Supermicro stock would reach $100,000, buying a fractional share at a reasonable level would still be possible.
Just because Supermicro’s stock crossed the $1,000 threshold doesn’t mean it will split its stock. But it’s a historical level where many companies have chosen to split, and investors will likely receive word if one is inevitable soon.
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Keithen Drury has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
Is Super Micro Computer Ready for a Stock Split? was originally published by The Motley Fool