What exactly does it mean when stock splits? I had heard this was a good thing. Is it?
2007-07-19 09:46:32 · 5 answers · asked by Inquisitive 2 in Business & Finance ➔ Investing
It's of no particular value to the current owner of shares. A split of 2:1 for a stock valued at $80 per share will result in an owner doubling his number of shares which will fall to half their value ($40 per share), with no overall gain in value.
The notion of a stock split is to make the shares seem more attractively priced to new potential investors.
2007-07-19 09:51:59 · answer #1 · answered by acermill 7 · 2⤊ 0⤋
Management usually decides to split a stock when the price is getting "high". So a stock split is seen as a positive thing, the price is going up. Many people buy stocks on the news of an announced split. It really doesn't make sense to me, but stocks that are splitting seem to have a certain momentum.
2007-07-19 16:54:53 · answer #2 · answered by hottotrot1_usa 7 · 0⤊ 0⤋
its exactly like trading one dime for two nickels...the value is the same, but now you have it in two pieces...
its good news because it will lower the stock price, thus making it easier to buy into..thus raising the price.
some will argue it does not matter and give some good examples...true...but at least the company is doing well enough to be able to split the stock
2007-07-19 20:13:43 · answer #3 · answered by zioncanyon 3 · 0⤊ 0⤋
Stock Splits mean nothing.
It's that simple.
2007-07-19 18:17:02 · answer #4 · answered by Common Sense 7 · 0⤊ 0⤋
It isn´t good or bad thing, it´s just like change One $1 for Two $0.50
2007-07-19 16:55:10 · answer #5 · answered by Albert M 1 · 0⤊ 0⤋