A stock split’s main purpose is to make a company’s shares more appealing to potential investors. By raising the number of outstanding shares, it improves a company’s liquidity. Stock splits do not change the market value of a corporation; rather, they are a reassignment of share value by increasing the number of shares.
For example, on Monday, the much-anticipated Amazon.com, Inc. stock split was completed; shares went from $2,447 on Friday’s close to $122 on Monday’s open.
Retail investors who had been priced out of the e-commerce behemoth’s stock should now be able to purchase full shares and potentially create a trading strategy around it.
A corporation can, on the other hand, reverse split, increasing share value by reducing the number of outstanding shares. A company will normally do this to prevent being delisted from the exchange to which it is assigned or to improve its general image.
Citigroup Inc is an example of this: in 2011, during the financial crisis, the business notably executed a 1:10 reverse stock split: shares were valued at $4.52 before the split, and after shares reflected the x10 value of $45.20.
Here are some other notable names that have completed stock splits this year, either by split or reverse split. SMART Global Holdings Inc. 20:1 ACM Research Inc 3:1 Empire Petroleum Corporation 1:4 P.A.M. Transportation Services, Inc. 2:1 Tootsie Roll Industries, Inc. 1.03:1 Enovis Corp 1:3 MFA Financial, Inc. 1:4 Prenetics Global Ltd 1.29:1 A-Mark Precious Metals Inc 2:1 Brookfield Infrastructure Corp 3:2 DexCom, Inc. 4:1 Invesco Mortgage Capital Inc 1:10 Kinetik Holdings Inc 2:1
