3 Stock-Split Stocks That Can Plunge Up to 98%, According to Select Wall Street Pundits

Core Viewpoint - The article discusses the potential risks associated with three high-profile stock-split companies, suggesting that their stock prices may face significant declines despite current market enthusiasm for AI and stock splits [1][4]. Group 1: Stock Split Overview - A stock split allows a company to change its share price and outstanding share count without affecting its market capitalization or operational performance [2]. - Stock splits can be forward or reverse; forward splits make shares more affordable for retail investors, while reverse splits are often used to meet listing standards [3]. Group 2: Nvidia - Nvidia, a leader in AI hardware, completed a 10-for-1 forward split on June 7, but is forecasted to potentially decline by 98% according to some analysts [4][6]. - Concerns include the length of the current market bubble and competition from other companies developing AI chips, which may erode Nvidia's market share and pricing power [9][10]. - The company’s adjusted gross margin and GPU pricing power are believed to have peaked, indicating potential trouble ahead for its stock [10]. Group 3: MicroStrategy - MicroStrategy, known for its significant Bitcoin holdings, completed a 10-for-1 forward split effective August 7, with a potential downside of 87% according to analyst Brent Thill [11][12]. - The company holds 226,331 Bitcoins, valued at approximately $14.5 billion, but its software business has seen a 14% decline in sales over the past decade [13][14]. - Investors are paying a premium for MicroStrategy shares compared to direct Bitcoin purchases, raising concerns about valuation sustainability [14]. - The company has financed its Bitcoin purchases through convertible debt, which could pose risks in a bear market for cryptocurrencies [15][16]. Group 4: Cintas - Cintas is set to complete a 4-for-1 forward split on September 11, with a projected downside of 23% based on Citigroup analyst Leo Carrington's price target [17][19]. - The company operates in a cyclical industry, and economic indicators suggest a potential downturn, which could impact premium-valued stocks like Cintas [19]. - Cintas is currently trading at nearly 46 times the consensus earnings per share for fiscal 2025, raising concerns about its valuation given its organic sales growth rate of 7.5% [20]. - Despite these challenges, Cintas has a strong capital return program, including a 15.6% increase in its quarterly cash dividend and a $1 billion share repurchase program [21].