After a stock split, should I re-enter the stock if I made money on it?

Question

I recently bought stock in a company that I researched extensively. I bought at 48 and sold at 51. Within a week it went to 61 then split. I exited too early but I am considering buying back in.

Answer 1

You site two reasons to "re-enter the stock." Neither are valid reasons for re-entering. A stock split is meaningless to direction and merely attracts more attention to the stock that will soon wane. Something else must draw investors, other than an advertisement of lower-priced shares or bookkeeping adjustment.

Whether you made money or not, has nothing to do with anything concerning the stock or the market or whether you should re-purchase.

Answer 2

A stock split has no effect on the value of a particular stock. The "pie" has merely been cut into twice as many pieces. A stock split is not proof that a stock is doing well but it may be a good indicator that the stock is on an upswing. Do not purchase a stock just because it has split--always do your research which includes analyzing the financial statements INCLUDING THE NOTES TO THE FINANCIAL STATEMENTS.

Hope this answers your questions.

Jeff K. CPA

Answer 3

Hold onto it. A splitting stock means the company is doing well. Stock price might dip because they doubled the number of shares. But your total holdings should be more. Over time your doubled stocks will go up and be doubly lucrative.

Answer 4

Wait for a dip (at least 5%), then, if it still makes sense and you still like it, buy some more with the profits you earned the first time you sold.

Answer 5

There is not enough information to answer your question.