Will Booking Holdings Stock Split?

Booking Holdings, the travel and technology company that owns brands like Kayak, Priceline, and Booking.com, has had an exceptional year on the stock market. This time last year, shares traded a little above $3,400. Currently, investors can expect to pay over $4,900 per share. 

Share value has increased for several reasons, including a stock buyback that boosted per-share earnings and a sharp increase in free cash flows. It also helped that the company beat its sales and earnings estimates.

The rapid increase in stock price, however, has encouraged investors and analysts to ask when Booking Holdings will split its stock. For some, stock splits look like excellent opportunities to diversify the types of investors it attracts.

While it’s true that stock splits make shares more affordable to purchase, they don’t always increase a company’s valuation. In plenty of cases, companies struggle to align their core values with those of new investors after a split. When that happens, companies can lose short-term value and lose sight of what made them so successful, which damages long-term value.

Will Booking Holdings split its shares in the near future? Let’s look at the facts to reach a conclusion.

Will Booking Holdings Stock Split?

Glenn Fogel, CEO of Booking Holdings gave a straightforward answer as to whether Booking Holdings stock would split and his answer was no, it will not.

In a 2024 interview, Fogel told Barron’s that he doesn’t want the kind of investors interested in stock splits. It’s not something you hear often from today’s CEOs, but Fogel doesn’t want money from people looking for a cheap investment.

A lot of articles have been written about Fogel’s response, and plenty of them acknowledge that what he says makes a lot of sense. The company is posting strong revenues and growth in a difficult economy. It’s doing a great job by focusing on its core mission. Why would it want a stock split when it has already attracted a base of loyal, long-term investors?

Of course, plenty of analysts also take issue with Fogel. People get excited when successful companies announce stock splits. There’s a good chance that the stock would surge even higher over the month leading up to a split if history is a guide. Equally, norms of the past suggest that there’s also high odds that the share price would correct almost immediately after the split. As calmer heads prevail, the overall value would dip for at least a year. This pattern happens so often that it has become expected.

Will Booking Holdings Issue a Stock Split in the Near Future?

It’s unlikely that Booking Holdings will issue a stock split in the near future because the company wants to focus on attracting long-term investors. That doesn’t necessarily mean you have to spend nearly $5,000 to invest in the company, though.

Fractional shares let you invest in high-priced companies like Booking Holdings without buying full shares. Online brokerages, like tastytrade, have made fractional investing easy and affordable for most people. Eventually, you might have enough cash that you feel comfortable buying full BKNG shares. Until then, you can profit from owning part of a whole share.

It’s also possible that Booking Holdings will follow Berkshire Hathaway’s example and create Class B shares that trade at discounted prices and give owners lower voting rights.

Keep in mind, though, Warren Buffett didn’t want his company to issue Class B shares. He reluctantly agreed to issue them because he worried that unit investment trusts would let people indirectly invest in Berkshire Hathaway. Buffett didn’t want to create a more affordable option. He wanted to protect his company’s value from outside influence.

Also, Buffett made this decision in 1996 when Berkshire Hathaway shares were trading at well over $30,000 each (over $60,000 in today’s money). Booking Holdings is an exceptional company, but it probably won’t come close to meeting that value within the next decade. If you want to compare Fogel’s management philosophy with Buffett’s, it’s unlikely that Booking Holdings will split its shares or issue Class B shares anytime soon.

What Would Happen After a Booking Holdings Split?

It’s unlikely but Booking Holdings will issue a share split, but we can still speculate about what would happen after such a split.

Let’s start by acknowledging that BKNG isn’t as expensive as some people make it out to be. Over the last year, the Nasdaq Composite has wavered between $14,477.57 and $20,204.58. Within that context, Booking Holdings doesn’t look all that expensive.

Obviously, some people still want the company to bring its per-share price down. A two-for-one split would probably bring each share’s price close to $2,400, give or take $100 or so. A three-for-one split would bring shares closer to $1,500.

None of these prices sound exceptionally more appealing than the current one. An investor who balks at spending $4,900 on a high-growth company probably won’t feel much better about $2,400 or even $1,500. This highlights the wisdom of Fogel’s position. Any meaningful split would have to attract low-stakes investors, many of whom won’t prioritize the company’s long-term health. They’re looking for a bargain, not an investment.

Should You Buy Booking Holdings Shares?

At nearly $5,000, Booking Holdings looks like a somewhat expensive investment for many people. However, its above-average P/E ratio (33.28 in an industry where 31 looks strong) and exceptional growth make it a reliable Buy. Most analysts agree. Research shows that 20 analysts have issued Buy recommendations; 12 have made Hold recommendations; and none encourage investors to sell their shares.

The fact of the matter is that Booking Holdings doesn’t want a low stock price that encourages short-term investors to buy and sell shares quickly. From Fogel’s perspective, that kind of volatility distracts companies from concentrating on work that builds long-term financial success. Fogel’s approach is refreshing in a market where short-term gains often trump long-term value. If you can afford to invest in his company, that perspective should make Booking Holdings even more attractive.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.