In anticipation of Google’s stock dropping by 50% on Wednesday (due to its 2 for 1 stock split) it is worthwhile to understand what this means to shareholders. Stock splits have historically been used to decrease the amount an investor would have to spend in order to buy a “round lot” or 100 shares. However, since it essentially costs $8.95 or less from most on-line brokerage firms whether you buy one share at $1,135 or 100 shares at $11.35 the investor doesn’t need a stock split to invest $1,135 in Google and get the same return when the shares increase. Another reason stock splits have been done is for management to show they believe the company will do well in the future.
via Business News - Yahoo Finance http://ift.tt/1oqLBvz
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