Ask Matt: When will Facebook split?

Q: Is Facebook going to split its stock?

A: Facebook (FB) now has so many friends on Wall Street it is splitting its stock. But while the timing of the 3-for-1 split isn’t known, it’s a financial non-event.

Shares of Facebook have been on a tear, rising more than 30% over the past year. Facebook, which some thought couldn’t survive as a public company, is now the sixth most valuable company in the Standard & Poor’s 500. The rally has pushed shares of Facebook to more than $120 a share, which is beyond the level some investors might expect a company to split. In a 3-for-1 stock split, for instance, a company would triple the number of shares investors own. But at the same time cut the per-share price in a third, leaving the value of the stake unchanged. Some investors like the idea of owning more shares. There is also academic research suggesting stock splits might signal a management is comfortable enough with the future as to not be pessimistic. Facebook’s split is being structured, too, to allow CEO Mark Zuckerberg to keep control. But when it comes to valuation, the per-share price of a stock by itself doesn’t tell you much. Investors know to examine other benchmarks like the price-to-earnings ratio.

Paste BN markets reporter Matt Krantz answers a different reader question every weekday. To submit a question, e-mail Matt at mkrantz@usatoday.com or on Twitter @mattkrantz.