America On-Line: will it survive ...? Message Board

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Technology Stocks : America On-Line: will it survive ...?

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To: J. P. who wrote (11594)	10/27/1998 5:39:00 PM
From: Bill McCullen	Read Replies (4) of 13594

J.P. The only thing a split does is make a stock more affordable for small investors who may not want to purchase odd lot share counts of expensive stocks. How does a split translate into a four fold increase if the stock price doubles? The stock either doubles its market cap or it doesn't. I am amazed at the enthusiasm shown for splits as they really have little meaning in the valuation of a stock. If 225M shares of AOL are worth $122 each today then 450M shares are worth $61. Your logic is about what I expect for someone who sees a $122 stock as undervalued after it reports earnings of .26 with gross margins of 37% (this is not MSFT folks). Bill

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