The analysis indicates that Large initial public offerings have done well this year. Furthermore, One of them is CoreWeave (CRWV -4.
71%), a company that fashions data centers with advanced graphics cessing units (GPUs) specifically for running large language models and artificial intelligence (AI) applications.
Instead of having to build their own infrastructure, a costly and complex undertaking, companies looking to create and run AI applications can essentially rent the infrastructure from CoreWeave, in today's financial world.
Since going public in March, CoreWeave has gone on a parabolic run and is already up 200% to a $59 billion market cap (as of July 25). Could a stock split soon be in the cards.
Additionally, Understanding stock splits Stock splits and reverse stock splits are tools used by companies to change the price of a stock and a company's outstanding s without changing the market cap.
Moreover, That's crucial for investors to understand.
If you own a stock before it undergoes some kind of stock split, you will see the stock price and number of s you own change, but your equity position will remain the same.
However, Image source: Getty Images. However, On the other hand, Stock splits decrease the price and increase the s outstanding.
They can be a useful way for a company to make the stock feel more attainable for investors if it just went on a big run and now trades for hundreds or thousands of dollars per.
Stock splits can also boost liquidity. An example of a stock split would be a 2-for-1 stock split, given the current landscape.
Let's say an investor owned 10 s of a stock trading at $200 per, meaning their total equity position amounted to $2,000 (noteworthy indeed).
In this scenario, the company would exchange two s for each one the investor owned, so the number of s the investor owned would double from 10 to 20 (something worth watching).
Meanwhile, But remember, the equity position of $2,000 remains the same, so the new price would be $100 ($2,000/20 s).
A reverse stock split does the opposite and increases the price while lowering the total count (noteworthy indeed).
A common use of a reverse stock split would be if a company is struggling to get into compliance with rules set by the New York Stock Exchange or Nasdaq, in this volatile climate.
Both exchanges require companies to trade for $1 for 30 consecutive trading days, in light of current trends.
A reverse stock split could help a company get its stock price above $1 and back into compliance if it thinks it will be able to turn things around and wants to stay on a major exchange.
Companies may also use a reverse stock split to increase its stock price up to a level more in line with peers, given the current landscape. Is CoreWeave Next (this bears monitoring).
CoreWeave has been on a big run, but it's not abnormal to see large AI stocks trading for hundreds of dollars per, as they've been.
I suppose the company could conduct a stock split to get its price down to make the stock more attainable, but I don't see a real need, given current economic conditions.
CoreWeave is a fast-growing company in the AI space, so I suppose if the AI rally continues, the stock could go on another big run, making management once again think a stock split (noteworthy indeed).
However, this seems unly to happen in the near term, given the current landscape.
Nevertheless, According to MarketWatch, only 74% of CoreWeave's outstanding s are public right now, given the current landscape.
That's because several large holders are still under lock-up agreements, which is common to see after an IPO and means they aren't allowed to sell their s for a certain amount of time.
On the other hand, Additionally, Most of the lock-up periods for insiders at CoreWeave reportedly expire in late September, when most insiders will be able to sell s.
Not only will this add liquidity, but it could induce selling pressure as more supply floods the market (fascinating analysis).
Additionally, CoreWeave does not appear to be at any risk of breaching compliance rules with the Nasdaq, with its huge market cap and a price over $120, as of this writing.