what happens when a stock splits? and how can I benefit from it?

Answer 1

If the stock splits you own twice as much stock but it's worth half the amount per share, but stocks split because they have been doing good, so there is a good indication they will go up again.

Answer 2

A stock split doesn't benefit you at all. It means that your $500 google stock, is now worth $250. But instead of having 10 shares, now you've got 20 shares. The advantage to a split is it brings down the price of the stock for average investors. A company splitting usually means the company is doing well and the stock price will normally go up during a split because it's a sign a company is doing well.

Unless of course its a 1:2 split. Where your $500 google stock is now worth $1000 but instead of 10 shares you've got 5. This is a sign a company is doing poorly and needs to combine shares to remain listed on a stock exchange.

Answer 3

I'm not an expert in this, but as i understand it, it's quite simple.

A stock which is split simply divides the value of each individual stock in two and any current shareholders end up with double the value of the stock. This doesn't really affect the shareholders, but it generally means that a stock is doing well. The reason they do this is because as a stock goes up in price people who only buy small numbers of stock in many companies are more compelled to purchase a lower priced stock.

Anyways, as i said, i'm no expert, but this is how i understand it.

Answer 4

Although the price per share drops you have twice as many shares. And since the price per share is lower it has a greater tendency to move up at a quicker rate

Answer 5

Check you Motleyfool.com. It is a great learning tool for teaching the financially illiterate, like me!!