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GE Vernova (NYSE: GEV) has been an extremely successful spinoff. The company's stock has surged about sevenfold since separating from General Electric (GE) in April 2024. The spinoff enabled management to focus intently on the energy segments without distraction from other legacy GE businesses.
The resulting strong stock performance came from a surging backlog of orders, while management expanded profit margins, generating massive free cash flow. With the stock recently trading above $1,000 per share after a more than 50% gain this year, now may be the time for GE Vernova to split its stock, which would lower the share price, increase the number of shares, and have no effect on the value of an individual's shares.
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Several large companies, including energy drink maker Monster Beverage and online auto dealer Carvana, have executed stock splits this year. Travel technology company Booking Holdings even executed a 25-for-1 forward stock split in April, dropping the share price from over $4,000 to about $170 per share.
Although a stock split does not alter the company's overall value, it can indicate management's confidence in the business's fundamentals. Executives are usually reluctant to split a stock unless they are optimistic about the stock's future performance. Since it doesn't change the company's actual value at the time, it might not be surprising that stock splits don't always mean shares will rise over the long term.
But momentum in the underlying business can also be reinforced by a stock split announcement, as it signals management's confidence in the business. Data show that short-term momentum in the stock price coincides with stock split announcements, as shown in the chart below.
GE Vernova's business certainly qualifies as strong. The company generated $5.1 billion in free cash flow in the second quarter. That compares to just $3.7 billion in all of 2025. GE Vernova CEO Scott Strazik summarized the state of the business with these comments in the Q2 report:
We delivered strong financial results in the second quarter as global demand for our products and solutions continues to grow. With a backlog of $176 billion, continued revenue growth and margin expansion, and significant free cash flow generation, GE Vernova's momentum is building, and we are raising our 2026 financial guidance.
So the business is strong and shares are nominally pricy, making some investors wonder whether GE Vernova will split its stock soon, which could make shares more attractive and more actively traded. When a stock splits, it can enhance liquidity by rendering shares (with a lower price tag) more accessible to a broader range of investors. Although many brokerages now offer fractional shares, most people likely underutilize this less-advertised option. Consequently, a reduced share price can attract more buyers by creating a sense of increased affordability. Remember, though, price is not value.
Investors don't know whether GE Vernova stock will be the next to split. The company has made no announcements. Whether one waits for a potential split or not, though, owning GE Vernova stock looks to be a good investment right now.
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Howard Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Booking Holdings, GE Vernova, and Monster Beverage. The Motley Fool has a disclosure policy.
Stock-Split Watch: Is GE Vernova Next? was originally published by The Motley Fool
