Meta Platforms and Netflix have shown remarkable growth since 2022. Both companies are on a strong financial footing and offer interesting opportunities for investors. A stock split could add fuel to the fire and bring their nominal prices in line with other high-flying tech stocks.

Unlock the Potential of These Stocks with a Stock Split

Meta Platforms: A Tale of Efficiency and Growth

Since 2022, Meta Platforms has been driven by clear management focus. CEO Mark Zuckerberg declared 2023 as the "year of efficiency," aiming to cut operating expenses and focus on key areas. This strategy led to a 62% increase in operating earnings in 2023 and a 52% rise through the first nine months of 2024, despite significant spending on artificial intelligence.Artificial intelligence is at the core of Meta's business, using machine learning algorithms to determine the best content for users. With advancements in large language models, Meta overhauled its recommendation engine with great success. Generative AI is set to transform the business, enabling businesses to communicate their advertising objectives and budgets to Meta, which will handle the rest.As of now, Meta stock trades at $620. A stock split could bring the price back in line with other tech stocks. The median price target on Wall Street is $660 per share, indicating a potential 6% upside. Moreover, the current stock price is less than 25 times analysts' 2025 earnings expectations, making it a bargain compared to other big AI stocks. Analysts may need to revise their price targets due to various factors, not just a potential stock split.

Netflix: A Journey of Transformation and Growth

Netflix's growth over the past two years was fueled by two major changes. In late 2022, the company introduced an ad-supported tier, attracting 70 million viewers and reinvigorating subscriber growth by 27%. Advertising has also opened up new content opportunities, including live events and sports.Netflix launched its own advertising technology in select markets this year and plans to expand it to all ad markets next year. As the advertising business grows and monetization improves, there is unlimited revenue potential without the need to constantly raise subscriber prices.The company also cracked down on password sharing, which initially caused some challenges but ultimately led to a significant increase in subscriber revenue. While the impact of password sharing is temporary, Netflix still has opportunities to grow its subscriber base in international markets and increase revenue per membership in established markets through better advertising monetization and higher ad-free subscription prices.Currently, Netflix stock trades at about $920 per share, above its last split price in 2015. Analysts have a buy rating on the stock, and JPMorgan analysts have set a $1,010 price target, suggesting a nearly 10% upside over the next year. Despite the significant increase in stock valuation over the past two years, with the stock trading at 46 times forward earnings estimates, Netflix's operating leverage could lead to strong earnings growth in the coming years. It has proven to be a great investment opportunity in the past and may repeat history as it shifts more revenue to advertising.