Stock Split

[Passport1]

Question for BITOG investors.

I own some stock in a major pharmaceutical company. The stock price is approaching the point where a probable split will happen. Understand this gives the investor twice the shares at half the price so no actual gain in value. So what should the investor do, buy more at the lower price, sit tight or sell the entire lot? My crude analogy; If you want to catch rain water is it better to have one big bucket or two half sized buckets?

Any experience with this situation?

 

[JeffKeryk]

Stock splits make the stock more attractive to the buyer due to lower price. That's it.

 

[Boomer]

Like the company? let it ride.

 

[97prizm]

Stock splits make the stock more attractive to the buyer due to lower price. That's it.

Doesn't that encourage more people to buy causing possible dilution or devaluation of the stock?

 

[Astro14]

Doesn't that encourage more people to buy causing possible dilution or devaluation of the stock?

Actually - it’s the opposite.

If you encourage more people to buy, the price goes up.

 

[JavierH19]

It depends on a few more things. I remember I read an article about stock splits and it said that it is sometimes done to increase volume so buyers and sellers can have better spreads on the bid and ask quoting and liquidity which is good for everyone and is theorized to help revitalize order flows for it and can help bring more attention to it.

 

[demarpaint]

Splits are usually OK. Sometimes dumb money rushes in driving the price up.

 

[JavierH19]

Doesn't that encourage more people to buy causing possible dilution or devaluation of the stock?

Dilution happens when they issue more new shares and add more to the pool of available shares and that's what devalues the stock and when that happens shares always go down. The opposite happens when shares are taken out and that can be done by buy backs. Having less stock helps with performance as they can now have higher good metrics like earnings per share and price to earnings and others I'm likely not remembering.

 

[TheOilWizard]

Question for BITOG investors.

I own some stock in a major pharmaceutical company. The stock price is approaching the point where a probable split will happen. Understand this gives the investor twice the shares at half the price so no actual gain in value. So what should the investor do, buy more at the lower price, sit tight or sell the entire lot? My crude analogy; If you want to catch rain water is it better to have one big bucket or two half sized buckets?

Any experience with this situation?

It also makes stock-based compensation more lucrative for potential employees. Imagine an employer offering you 10,000 shares for a sign-on offer instead of 1,000 (in the case of a 10-1 split). Even if the value is the same, the higher number of shares is more appealing.

 

[Pablo]

Reverse split? You bought the wrong stock!!!

 

[Bryanccfshr]

Short term blip, long term focus on the quality of the business and the market for it.

 

[ecotourist]

A stock split makes very little difference. It's a bit like trading 2 X $5 for a $10 bill. If anything, it's now more attractive to buyers.

Sit tight.

 

[Dave Hess]

Question for BITOG investors.

I own some stock in a major pharmaceutical company. The stock price is approaching the point where a probable split will happen. Understand this gives the investor twice the shares at half the price so no actual gain in value. So what should the investor do, buy more at the lower price, sit tight or sell the entire lot? My crude analogy; If you want to catch rain water is it better to have one big bucket or two half sized buckets?

Any experience with this situation?

What company ?

Maybe sell half if you are getting antsy….

 

[Dave Hess]

Splits are usually OK. Sometimes dumb money rushes in driving the price up.

Tesla was a great example of $$$ pouring in after split.

 

[KJSmith]

My understanding is that they want to keep stock in a certain price range to attract institutional buyers.

 

[KJSmith]

Reverse split? You bought the wrong stock!!!

The company I worked for did a 15-1 reverse split.
The market analyst called it a move of pure desperation..... and appropriate!!!

 

[bdcardinal]

I think the NVDA split was a net positive. Also happy I was such a nerd in 2009 when I bought 200 shares of them for $1.25/share

 

[Passport1]

What company ?

Eli Lilly

 

[Dave Hess]

I think the NVDA split was a net positive. Also happy I was such a nerd in 2009 when I bought 200 shares of them for $1.25/share

 

[gfh77665]

Splits have an almost neutral effect. Ignore them.