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StreetInsider: Stock Splits No Longer Fashionable
by , 2:35 PM EDT, October 25th, 2007
Back in the dot-com days, it was fashionable for companies to split their stocks, but that's no longer true, according to the StreetInsider Insider's Blog on Thursday.
Many have wondered if an Apple (AAPL) stock split is imminent with the price having surged well into the US$180 range. The answer just might be that it's no longer fashionable and no longer a sign of success, especially when a company has so many shares outstanding.
"Back in the dot-com days, Internet stocks would go up and then split, then go up again and split. It was basically a sign a passage. If your stock went up enough, you would split your stock, make headlines, and then gain more buyers, and a few months later, split again. Investors basically forgot the pie concept, that a split just cuts the same pie into more pieces," the author wrote.
These days, however, in a trend started by Google, companies see prestige in emulating that company. Apple was cited as one of those.
"Today's new status symbol," the author observed," is having a stock price that is higher than the average man's daily wage."
Observer Comments
Thu Oct 25, 2007 4:29 pm Subject: Two views
I think it cuts both ways. A high share price might make the stock "seem" more valuable, but it can be intimidating for small-time investors, even the ones who know it's the same thing either way:
"Let's see, I can afford to put $2500 in the market right now and I want to buy some GOOG...<looks at share price>...Sheesh! I can only buy 3 shares! And I'll have $500 left over."
Thu Oct 25, 2007 11:20 pm Subject: Microsoft does not treat you like this!
We keep our stock between 30 and 50 just so our investors dont have to worry about this kinda crap!
http://fakesteveballmer.blogspot.com
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