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What is a Stock Split? And Why Do Companies Split Their Shares?
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- čas přidán 24. 09. 2018
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What does it mean when a company decides to do a stock split?
For the company and existing shareholders, it actually doesn't change that much. Stock splits change the number of ways ownership is sliced, but they don't change the value of a company or the value an individual holds.
That's because when a company announces a stock split, they give existing shareholders stock as a dividend to make them whole for the increase in share count.
If it doesn't change anything in terms of value, why do companies split their stock?
- Stock splits reduce the price per share, making it easier for new investors to become a shareholder of the company. This is partially why Apple split its stock 7-for-1 in 2014.
- Splits also increase the number of shares outstanding, which can help with liquidity.
- Some special securities like options are sold in blocks of 100 shares, so if a company’s stock price is very high, it requires a lot of money upfront to create these transactions.
Really, stock splits are simply cosmetic changes to how ownership of a company is held, which is why fewer companies are doing them. It's best to think of a stock split like your share of a pizza pie -- you can have one slice of a pizza that's been cut four ways, or two slices of the same pizza that's been cut eight ways. Either way, you're getting the same amount of pizza.
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Great video, I've been interested in investing ever since I came across articles of people making up to $150,000 and more in this period, thanks for the video but is it really possible for a retail investor to achieve this in months?
Starting early is simply the best way of getting ahead to build wealth , investing remains a priority. I learnt from my last year's experience , I am able to build a suitable life beause I invested early ahead this time.
that's quite impressive, you surely made a good bit of money. I myself invested in warren's BRK-A stock quite pricey but totally worth it.
my 401k growth has been stagnant since the 2019. I wouldn't mind consulting the advisor who guides you, I really want to grow my retirement fund since I could retire in 3 years.
STEPHANIE KOPP MEEKS! she is whom i work with look her up.
She appears to be well-educated and well-read. I ran a Goo-gle search on her name and came across her website; thank you for sharing..
Who is here after Tesla announced splitting?
Trying to figure out if I'll be rich or broke
Apple split its share recently... figuring out if its a good time to invest or not
@@cygnuscraft9544 It’s a great longterm investment. Tesla is tricky to make money short term. But a Ford engineer said Tesla is ahead of every auto manufacturer by 5 years. Is FSD is released and turns out to be successful, it’ll be bank for investors. But please do research and only put in money from your own knowledge and not others. Only put in on what you can possibly expect to lose.
Wow he explained perfectly
Thanks Anthony! Most things are better explained w/ pizza.
Nice - Clear and to the point. Thanks
Excellent job explaining that!
Nice job explaining. Easy to follow
Thanks for extremely clear explanation. You seem like way too nice and honest a person to be working in finance.
Dude..Peet how old are you.... come on
Loved this!!
Loved the video.
Thanks man
Ur the best
very well explained, thank you!
U nailed it perfectly.
This video made me subscribe! very easy to understand
Thankyou atleast I understand this part about the share market
well explained
Thanks from South Africa
so that's why Berkshire Hathaway has two different types of stocks...omg thank you for explaining! totally needed that clarification
Fantastic and simple video. Quick question, what would happen to my shares if a company announces a stock split like with Apple yesterday?
*Tesla split 5:1*
It was four to 1 same as Apple
Reaching out to the smaller crowds lol
*Apple stock split really helped, from the day I turned 18 I bought AAPL :)*
Love it! You could give it to your kids for *their* graduation.
Hi is there will be any change in the financial statements when company makes stock split.
Apple split stocks 4:1
Here for that too LOL
Lmao same
Now tesla got 5 to 1
I’m here for Apple August 31st
If I put a STOP order in on a stock, will the stock sell if it splits?
Dense idea demystified . Thanks
What will be good for investors to buy the stocks after split the share or before split the share?
hello amigo and thanks a lot for the video
i have one question please...
i understand every word you say, but i don`t understand how buffat make "B" shares
and don`t offensive the stock holders ?
Or how Apple's split will not hurt current shareholders??
Thanks in Advance
If a company market cap grows is a stock split the only way to grow their shares outstanding?
@Coloredspaces
What do companies gain by splitting stock or creating liquidity in the market?
informative
Thank you for your great explanation! Go Tesla!
Stupid question but if my shares from.the stock split go up do that mean I increase the value of each share I have? Basically asking is per share now worth more?
Great Explanation Tony Stark. It all makes sense. You are Iron Man.
Question. I'm very new to the stock market and I bought a stock at $2.15 a week ago this morning that stock split 1 to 8 and jumped up to $17.00 a share! I got a message saying fractional shares resulting from the split will be paid as cash in 1 to 2 weeks. What does that mean?
What company was that and congrats WOW
What's the point of splitting stocks to make it easier to buy when you can just buy fractional shares? I definitely need to learn more about this
Does being cash flow negative affect the company's decision to dilute?
0:21 2nd one (splitted one) it gives you much utility compared to 1st one
What does a company get from these shares, is it like selling nothing. It's like a big game where you bet on a company that it will worth more in future and that company is selling its worth as a potential for you to profit? Idk if I understood stocks correctly
So if one share is worth $1,500 and they do a split and now your stock is worth $300. instead of owning one share you now have 5 shares that are at $300 correct? Also if that does happen, you're saying that stock wont go back up to that price. Just to make sure im understanding this correctly
So does this mean you get more dividends?
Don’t the dividend gets split too since it becomes fractional
Can you give another example of companies in real life please? Like how did they deal with stock split
Are fractional shares not 'the norm' nowadays? I'm only young and have only recently started investing in stocks, and I use Freetrade and every investment I have is fractional. I figured it makes much more sense for people to invest this way so I assumed that was probably the popular approach.
What about dividends? Do you get more money?. Thanks for the video
Dividends are generally adjusted to reflect the split, so you wind up making basically the same amount!
@@MotleyFool Day when you buy 1000$ for 1 share and it splits 4 each share is 250, will each share rise back up to 1000$ when the company grows and does well again and now you have 4000$?
wait so when you own a split share your owning 1/5th of share or whatever they split the share into?
No, if the split is 5:1 that means your one share is growing into 5 shares but the overall total value doesn't change.
After a stock split, could the company ever reverse it self out of a split
The one split into quarters because it has more pepperoni.
isn’t this solved with fractional shares?
Still not understanding . Apple did a split . Should we sale before the split ??? Are we going to lose money since the share price will be different ??
nichole mitchell No Nichole, you'll have exactly the same amount of money. If you own one share at 400 now you'll have 4 shares at 100 each. But the more shares you have the more dividend you get so that's good. Plus if shares keep growing and they jump for example from 100 (I mean after the split) to 110 then you can add that benefit to each of you 4 100$ shares. You'd be having a gain of 40$. I think that's how it works anyway! It's a good thing, don't worry 👍👍
The word is Dilute. Read about diluted stocks to see if that will happen to you. Be safe. Dividends can fluctuate.
Thank you both . I did some more research. I think we should be fine !
I am a new trader and this is my first year investing due to COVID but I knew Apple was a good company . So this is my first year trading and expecting a stock split .
nichole mitchell Apple is a phenomenal company and I'm sure you'll be fine!
Tesla is about to do this from what I read it's five for one
What if you don't have a share for example I only have $40 in Tesla because it is going crazy right now but I'm not rich so I just put $40 and I gain $3.80 just in a week I wish I had thousands of dollars to put in that stock it grew 10% and just a week you would make a lot of money if you had let's say a million you would make 100, 000 doing nothing I wish I knew somebody I could just borrow a million from and make a quick hundred thousand to give the million back
Who's here because of nvidia today ;)
1:06 exactly where you lost me
So nobody lost money...
Who is here after Tesla announced splitting cos I am...
Gme? Anyone 😂