Will MercadoLibre Finally Split Its Stock?

Stock splits don't matter in terms of changing the value of a company, but many investors still see stock splits as a positive sign of a company's confidence in its long-term prospects. Some companies wait a long time before even considering a stock split, and Latin American e-commerce giant MercadoLibre (NASDAQ: MELI) certainly isn't the first company to let its stock climb substantially without splitting its shares. Nevertheless, as MercadoLibre's stock price has climbed to new heights over the past decade, some investors want to know if they'll finally see the company do a split.

In evaluating potential future stock splits, it's useful to look at what has motivated a company to do a stock split in the past. In MercadoLibre's case, the company has never done a stock split, so there's no history to examine that can tell us whether there's a line in the sand at which the e-commerce specialist is likely to make a move.

MercadoLibre has been highly successful, and it didn't take long for shareholders to realize substantial gains from the stock. In its 2007 IPO, MercadoLibre offered stock at $18 per share, and the stock opened at $22 and closed on its first day at $28.50. Shares climbed to $75 per share within a few months before the financial crisis took MercadoLibre back down below its IPO level briefly. Many investors feared that the 2008 recession would put an end to interest in global investing, and stocks focusing on emerging markets like Latin America took particularly large hits.

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Source: Fool.com