when a stock splits

[Ice]

when a stock splits what all happens if you own the stock? do u just now have 2 instead of 1 or what? is it still valued the same, like 1 share is worth 100 and 2 is worth 50 each

[Ciao]

Originally Posted by Ice

when a stock splits what all happens if you own the stock? do u just now have 2 instead of 1 or what? is it still valued the same, like 1 share is worth 100 and 2 is worth 50 each

presuming in USA it is the same as here
yes Ice you are right in your example..
the value it remain the same but only change the shares

1@ 100
2@50 (you still got 100 of value but with 2 shares)

hope it is clear...

[Grizzums]

Originally Posted by Ice

when a stock splits what all happens if you own the stock? do u just now have 2 instead of 1 or what? is it still valued the same, like 1 share is worth 100 and 2 is worth 50 each

It depends on the ratio of the split....I am presuming a f/s (forward split)....if the split is a 2 for 1, then yes ciao's example holds true. The company is, in effect, increasing the number of its outstanding shares by dividing each share. Market Cap stays the same. Most common f/splits from what I know are 2/1, 3/2 or 3/1.

Easiest method for determining new share price is to divide previous stock price by appropriate ratio.

Ex. Previous share price 100

2/1 f/s = 100/(2/1) = 50

3/2 f/s = 100/(3/2) = 66.67

3/1 f/s = 100/ (3/1) = 33.33

This is not to be confused with Reverse Splits.

Good Luck.

[Guthrie]

This is an old thread but I suppose this is where my comment fits.
As if there isn't enough reasons to avoid stocks that are diluting. When they do R/S E*TRADE will charge you a $20 manadatory reogranization fee, no matter how many shares you own. So I owned 1 share of a company after they did a R/S, worth $.06 and they charged me $20 to "reorganize" that stock in my portfolio. It's a bullcrap charge if you ask me. However, I found out that you can also sell that stock without having to pay more than the proceeds for commission. ie, if the stock is worth less than commission, all the proceeds go to commission so you don't have to pay $9.99 to sell $.06 worth of stock.
Just another reason to avoid HAVING stocks that are diluting in your portfolio, even if it's only $1 worth of shares.

[sg1efc]

Always lots of great info to learn at this forum - Thanks everyone for posting.

[CatFish]

here is what i have learned about a stock split. with a major blue chip stock forward splits are a good thing. it means success. however most of us play penny stocks and here are the main reasons a stock splits

forward split. the reason most companies do a forward split is to appease lenders. they tell xyz company you lend us or give us x amount of dollars and we will give you x amount of shares and then we will do a split and increase that amount big time with a forward split. thus results dilution

reverse split. simple enough the company is out of shares to sell so they do a reverse split. even though the outstanding shares reduces big time but their authorized shares never change so they do a reverse split and have billions of shares they can dump into the market again.

splits are never a good thing in the world of pennies

[BadThad]

Originally Posted by CATFISH

here is what i have learned about a stock split. with a major blue chip stock forward splits are a good thing. it means success. however most of us play penny stocks and here are the main reasons a stock splits

forward split. the reason most companies do a forward split is to appease lenders. they tell xyz company you lend us or give us x amount of dollars and we will give you x amount of shares and then we will do a split and increase that amount big time with a forward split. thus results dilution

reverse split. simple enough the company is out of shares to sell so they do a reverse split. even though the outstanding shares reduces big time but their authorized shares never change so they do a reverse split and have billions of shares they can dump into the market again.

splits are never a good thing in the world of pennies

Great point, splits are never good in penny stocks IMO either. However, on the big boards they are usually a good thing.

[sg1efc]

Originally Posted by CATFISH

here is what i have learned about a stock split. with a major blue chip stock forward splits are a good thing. it means success. however most of us play penny stocks and here are the main reasons a stock splits

forward split. the reason most companies do a forward split is to appease lenders. they tell xyz company you lend us or give us x amount of dollars and we will give you x amount of shares and then we will do a split and increase that amount big time with a forward split. thus results dilution

reverse split. simple enough the company is out of shares to sell so they do a reverse split. even though the outstanding shares reduces big time but their authorized shares never change so they do a reverse split and have billions of shares they can dump into the market again.

splits are never a good thing in the world of pennies

Great point - never knew or thought of that. Thanks for letting us know.