To the stock trader really. I believe you recieve double shares but the market value is split. So what are the pros and cons to the share holder?
2007-06-15 03:47:28 · 5 answers · asked by Anonymous in Business & Finance ➔ Investing
There really are no pros or cons, basically; who is richer, the man with ten $100 bills, or the woman with a thousand $1 bills?
Occassionally a split will help increase "liquidity" by discouraging fewer investors who think the price actually matters, but that's very few people.
Mostly splits are done to get news coverage!
2007-06-15 03:58:17 · answer #1 · answered by Anonymous · 1⤊ 0⤋
If the stock splits 2 for 1 or 3 for 1 that's good. But if it splits 3 for 2 that's great, because the price stays the same but you have 1.5 times more stock.
The downside is if a stock does a reverse split, like 1 for 5 or 1 for 10. That happens too.
2007-06-15 06:51:17 · answer #2 · answered by Lawrence E 4 · 0⤊ 0⤋
The reasons corporations split their stock is simply to enhance the 'liquidity' in their shares. When a company's stock price gets high, many retail investors will not invest solely because of the psychological aspect of owning a $500 / share stock (needs to gain $100 for a 20% return, sounds expensive, etc). Also, some investors might not even have $500 to invest, so a stock trading at $500 is out of their range. If Google were to split 10-for-1, more investors would be interested in its stock at $50.
2007-06-15 04:57:46 · answer #3 · answered by jimbobbighouse 4 · 0⤊ 0⤋
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2016-02-16 09:43:27 · answer #4 · answered by Anonymous · 0⤊ 0⤋
None - mind you, there comes at time when a split CAN make the shares more 'affordable' = check out Berkshire Hathaway :-)
2007-06-15 05:13:52 · answer #5 · answered by Steve B 7 · 0⤊ 0⤋
It is a big benefit in the long run if the stock grows.
2007-06-15 03:50:38 · answer #6 · answered by JOHN D 6 · 0⤊ 0⤋