My guess is the price will be about 1/3 as much after the split... ;-) ;-) ;-)
Actually, you're right, it will be interesting. Although anyone with half a brain knows that the stock is no "cheaper" after the split, there are several factors which do tend to apply upward pressure pre- and post-split.
Psychology - some people who wouldn't touch a stock at over $100 are for some strange reason more willing to buy it when it splits. There will therefore be an increase in the number of potential buyers, and basically no change to the sellers.
Odd lots - trading odd lots in many cases costs extra, which is one reason why a small-time buyer might wait until the split. (On the other hand, the per-share part of the commission is cheaper pre-split, but I don't think this has as much influence).
Option traders - the self-fulfilling prophecy...conventional wisdom is that stocks go up just prior to the split, perhaps in anticipation of the above reasons.
Liquidity - supposedly, liquidity increases post-split (I have never actually checked this out), which makes a difference especially to institutional investors, who need to be able to move large sums in and out. In theory, it makes sense - the above 3 reasons bring more traders into a stock, causing the actual dollar volume to increase.
These are all things that can tip the scales of supply and demand, though not hugely. Ballard is driven much more by news and momentum sentiment than by these marginal factors. Still, they often do have a positive effect.
Garth. |
