sounds like the availability heuristic (bias) to me.I hate the occasional snarky responses some people leave here.
I think everyone rationally knows that a split leaves you with the same amount of money. Yet look at the history of these large cap stocks post split. They tend to go up quite a bit. Psychologically, buyers think it's cheaper despite the ability to buy fractional shares. It could also pave the way for inclusion in the Dow. It's not a joke, it's understanding what happens in the real world and not the dogma that some here like to flex about.
Here's some 'ai' research. Amazon (AMZN) and Alphabet (GOOGL) both saw their share prices surge after completing 20-for-1 stock splits in 2022.
Nvidia (NVDA) recently announced a 10-for-1 stock split, and its shares rallied over 9% to a record high above $1,000 after the announcement. Historically, stocks have averaged 25% total returns in the 12 months following a split, according to analysis by Bank of America.
Tesla (TSLA) split its stock 3-for-1 in August 2022, and the shares have more than doubled since then, hitting new all-time highs.
Apple (AAPL) completed a 4-for-1 stock split in August 2020, and its shares have risen over 60% since then, outperforming the broader market.
Chipotle Mexican Grill (CMG) announced a massive 50-for-1 stock split in March 2024, sending its shares soaring to new records. Analysts expect further upside potential for CMG after the split.
just as you can find examples to prove a point (like stock splits bode well for future price appreciation) so too can you find evidence to the contrary (if you attempt to avoid confirmation bias):
here's another article that looked at 240 stock splits. The results:A stock split isn't a reliable indicator of whether a stock's value will increase or decrease.
Of the five stocks analyzed, only Amazon (NASDAQ:AMZN) outperformed the S&P 500 three months after its stock split, but it also fell behind over the long term.
Shopify (NYSE:SHOP) had the worst results, with its share value dropping significantly (although this was a continuation of a longer trend).
Changes in price that may look related to a stock split are often better attributed to longer-term or market trends.
Amazon's 2022 stock split
Tech giant Amazon announced a 20-for-1 stock split on March 9, 2022, at a time when its shares were trading for $2,785.58.
Amazon performed well initially after the announcement, with share prices rising 10.9% over the next month, compared to 4.9% for the S&P 500. However, prices fell from there.
Overall, from the March 9 announcement to the June 3 stock split, Amazon's share price decreased by 12.2%. The S&P 500 also decreased in value, but only by 4.0%.
Google's 2022 stock split
On Feb. 1, 2022, Google (NASDAQ:GOOGL) announced a 20-for-1 stock split. Shares were trading at $2,752.88 on the date of the announcement.
Google outperformed the market over the next month. Its share prices dipped by 2.6%, compared to a 5.3% drop for the S&P 500. But between the Feb. 1 announcement and the July 15 stock split, Google share prices decreased by 18.8%. The S&P 500 didn't lose quite as much, with its value falling by 15.0%.
In the months after the stock split, Google didn't keep up with the S&P 500.
Shopify's 2022 stock split
E-commerce platform Shopify announced a 10-for-1 stock split on April 11, 2022, when shares were trading at $617.40.
The announcement didn't help the stock's performance, as the price plummeted by 48.4% over the next month -- far more than the S&P 500, which suffered a 10.8% decline.
https://www.fool.com/research/are-stock-splits-good/
what do you think now?Stock Returns After Splits
Looking at current optionable stocks and going back to 2010, I found 240 stock splits. The table below summarizes how the stocks performed following those splits. The second table is for comparison and shows what the returns would have looked like if instead of buying the stocks, you bought the broad-market S&P 500 Index (SPX) instead.
The stock returns aren't particularly bullish. In fact, I would say they're slightly bearish. The short-term returns (out to a month) have a lower average return and percent positive than the general market. Going out three to six months shows an average return that is only slightly better than the SPX, but with a smaller chance at a positive trade. The bottom row of the table shows the percentage of stock returns that would have beat the SPX over each time frame. The very short time frame shows a less than 50% chance of beating the general market. After that, the percentage is just barely over 50%.
In general, stock splits don't seem to mean a whole lot for their performance going forward.
source: https://finance.yahoo.com/news/stocks-t ... 07029.html
Statistics: Posted by arcticpineapplecorp. — Sat Jun 01, 2024 10:08 pm