I don't understand how a company benefits when the split their stock.?

Question

Since they don't own the shares anymore what good does it do for them to split the shares?

Answer 1

You have some good answers, but it is good that you are aware that this doesn't really help the company--it is psychological not financial.

Answer 2

Company's usually split shares of their stock when the price of their stock is perceived to be too high. The higher price typically means that there will be less demand. By splitting the stock, they are lowering the price, and thus increasing the demand for the stock, meaning more people will be likely to purchase the stock, which is what the companies want.

Answer 3

A company "splits" its stock to make it more accessible to smaller investors. Since stocks are usually purchased in blocks of 100, a high stock price would limit the types of investors available.

Not all companies care about this, Berkshire Hathaway (Warren Buffet's company) does not split.

Answer 4

it makes the shares more affordable, it makes the company's stock more attractive, in the event of a hostile takeover attempt a split dilutes the holdings and makes it harder to buy a majority of shares. it's also a way to reward shareholders, because they get more shares, and the price will hopefully continue to rise after the split

Answer 5

It is a lot easier to sell 10 $19,999.00 Volkwagen Jettas than 1 $199,999.00 Ferrari Enzo.