Stock splits
As an investor, we love stock splits, it eliminates the high dollar value of stocks and makes it look like we own more. (When in reality, you still have the same percentage of ownership) But the best part of stock splits might be that the fact that Wall Street goes crazy after a big company stock split.
Stock splits are the division of shares into more or sometimes less shares to decrease or increase the stock price. Stock splits are done often by large growth companies who like to keep their values in the double digits. Reverse stock splits are done by companies that want to keep their price above a certain level, often the minimum price to stay on the exchange.
Regular stock splits send a company’s stock flying. Investors love stock splits and for whatever reason, often throw more money into stocks when they split. It is not uncommon for stocks move 4-6% after splitting. Stock splits are associated with profitable companies with a strong bottom line.
Reverse stock splits are the kiss of death to a corporations share price. Reverse stock splits are the complete opposite of a regular stock split. The amount of shares is typically cut in half so an investor owns half as many shares at twice the regular price. This is usually done by small, often failing companies to boost stock prices. Certain exchanges require a certain price per share to be listed on the exchange. Year after year, some companies have to continue these stock splits just to remain listed. There is no real advantage to a reverse stock split, so stay away from those companies that do it.
