SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Technology Stocks : Information Architects (IARC): E-Commerce & EIP
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: My Father's Son who wrote (2197)9/1/1997 10:06:00 PM
From: Jeffrey S. Mitchell   of 10786
 
Re: Dennis Mullen's question about 2 for 1 stock splits

Dennis asked:
How does a 2 for 1 stock split help a company raise money?

From a strictly mathematical point of view, a 2 for 1 stock split is a non-event. However, from an investor point of view, a lower stock price from a split can make that stock look much more attractive. Without stock splits, companies like MSFT would be trading at thousands of dollars per share.

Don't forget that all shares are split. This means the company has additional shares in the treasury that they can cash in during a secondary offering.

In theory, the lower the stock price, the more shares that are available to exchange hands. Institutions that buy and sell large blocks of shares need this liquidity. When you have institutional buying in a stock, normally the stock will go up (presuming, of course, buys outnumber sells). Therefore, an indirect benefit of a stock split is that you increase your chances of institutional buys and therefore increase your chances of getting a higher price for your stock.

There are several web sites that apprise people of companies with stocks that are about to split. Again, the theory is that stocks only split when there is enough interest in them, and thus such speculators are hoping to capitalize on the "new blood" that splits attract.

Hope this helps.

- Jeff
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News