Should You Buy This Monster Growth Stock Before Its 2-for-1 Stock Split Takes Effect on Aug. 11?

Investors love stock splits, and lots of investors love Monster Beverage (MNST +2.53%), home to the Monster Energy, Reign, Predator, Fury, and other brands. It has averaged annual gains of 19% over the past 15 years.

Monster Beverage is splitting its stock 2-for-1 on Aug. 11. Here’s what you need to know.

Image source: Getty Images.

The stock split was declared on July 8, but that’s not when your 100 shares become 200 shares. First, to be eligible for having your shares split, you’ll need to have been a shareholder on July 24, the “record date” for the split. If you qualify, the additional shares will be credited to your account on Aug. 10, the “distribution date,” after the market closes. The next day, Aug. 11, is when Monster’s shares will begin trading at their new price.

Today’s Change

(2.53%) $2.41

Current Price

$97.74

Key Data Points

Market Cap

$96BMarket cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.

Day’s Range

$97.02 – $99.17

52wk Range

$58.09 – $100.34

Volume

1K

Avg Vol

5.8M

Gross Margin

55.47%

A key thing to understand about stock splits is that they’re generally nothingburgers. Here’s why I say this: As I write this, Monster shares are trading at about $95 per share. Imagine that you own 100 shares, for a total current value of $9,500. Then the stock splits 2-for-1, meaning that you will end up with two shares for every one you own.

Here’s the catch: At the time of the split, the share price will be adjusted downward proportionately. So if the split happened today, the $95 stock price would be halved, to $47.50. You would now own 200 shares, but at $47.50 apiece, the total value of your stake would be… still $9,500. 

This will be Monster’s seventh stock split, with its first having happened in 1988 and its most recent one in 2023. When a stock’s price skyrockets, it’s not uncommon to see relatively frequent splits that keep the per-share price affordable to more people.

Should you buy this impressive stock now? I suggest thinking twice before doing so. The shares seem overvalued at recent levels, with a recent forward-looking price-to-earnings (P/E) ratio of 41 above the five-year ratio of 31.