Value companies, on the other hand, are more likely to split their shares to entice new investors with a lower stock price. This typically plays out with growth companies, which tend to consider soaring share prices to be evidence of their success.

According to NextAdvisor, some stocks work the same psychology in reverse - as the price rises, the stock’s allure grows, and the more coveted its shares become. In terms of investor psychology, that dynamic can boost a stock’s prestige and increase demand.Ī split usually indicates that previous shareholders were rewarded with so much growth that the stock got too expensive - and who wouldn’t want to jump on that wagon once the cost of admission became affordable again?Įven so, not all companies engage in splits. Shopify enacted a 10:1 split.Ĭompanies typically conduct stock splits when the share price rises so high that it’s prohibitive for new investors. Just this summer, Amazon split its shares 20:1, as did Alphabet. Some companies go really big, flooding the market with cheap shares. It will be Tesla’s second split in as many years. 25, the company announced in a press release. Tesla shares will start trading on a split-adjusted basis on Aug. This will triple the number of company shares while reducing the value of each by a third.

4, Tesla shareholders approved a 3-for-1 split, CNN Business reported. That’s just one of many tech-related splits that have made headlines recently - and they’re not all based on even numbers. In July, GameStop - the fairytale stock at the center of history’s greatest short squeeze - announced a 4-for-1 stock split. In this case, the post-split company will have four times as many outstanding shares, each worth a quarter of the original, as will the company’s investors. Just as a 2:1 stock split cuts a company’s shares in half, a 4-for-1 stock split divides each share into quarters.

When does nvidia stock split occur