at what point does a stock split.is there a determining factor..?

Answer 1

Splits shouldn't mean a whole lot to you though, they are mainly a trick to make a stock's share price look more attractive than the competition, it doesn't mean that the company is doing any better or is more fairly valued than before. Look at all the tech stocks that had about a split per year in the late 90s, running up to the 2000 crash. Each was essentially trying to underprice the other and attract more dollars, which, in my opinion, fueled the fire of overvaluation.

Answer 2

It's pretty much up to the board of directors. If they feel that the price of the stock is getting so high that people won't invest, then the stock will split to bring it to a more marketable level. For instance, if Joe has $10,000 to invest, and the stock he wants is selling for $150/sh, he won't be able to buy 100 shares of that stock (which is what many brokerages have for a minimum purchase for a low commission rate). However, if the stock split, the cost/share would drop to $75/sh, allowing Joe to be able to buy the stock.

Many of the smart people who spend lots of time thinking about this stuff feel that stock splits give the false illusion of value to investors. I'm not smart enough to know if that's true. For people who already own the stock when it splits, they just own more shares-it doesn't change the total value of their investment, meaning it's not like their stock just doubled in value because it split.

Hope you followed that!

Answer 3

Really its up to the company and it's major stock holders. If they believe the price is too high, they will split the stock so more people can afford when the price is lowered. The determining factor is up to the major share holders, or the board. not to common stockholders. An example would be "berkshere hathway" or somthing like that. Their stock price for each share is like $98,101.00. NOT a stock that normal people would want to buy. They do that because they want to. So its all up to the big players.

Answer 4

Stock splits are determined by the issuing company. There is no set factor, it's up to the judgement of the company leadership. Sometimes companies split stocks so they'll have extra shares available for employee compensation, dividend reinvestment plans, etc. Others will execute a split to lower the per share price of a stock, to make it more attractive to smaller investors.

Answer 5

It depends on what the corporation wants to accomplish. Generally they want to keep their stock valuations in the 30 to $70 area so the "smaller guy" can still afford to buy 100 shares. On the other hand, Warren Buffett, for his own reasons, finds that the $24,000 per share area is where he wants his stocks to sell at. Historically, IBM tends to split its shares when they go comfortably above $100 per share.

Answer 6

if the company wants make more volume, for example if a company has just 100 shares with a market cap of 1,000,000 who could afford to buy one share and it would be difficult for a trade or investor to buy and sell, because it would be difficult to find a buyer or seller.

Answer 7

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