ហេតុអ្វីបានជាក្រុមហ៊ុនបំបែកភាគហ៊ុនរបស់ពួកគេ – Why do companies split their stock
Stock splits are when a company increases or decreases the number of its shares without changing its overall market value. Companies do this for various reasons, and it can impact the company’s stock price and market value in different ways.
What is a Stock Split
A stock split happens when a company changes the number of its outstanding shares, but the overall value of the company remains the same. For example, if a company doubles the number of shares, each investor will own more shares, but the total value of all shares combined won’t change because no extra money is added to the company.
Forward Stock Split
The most common type of stock split is a forward stock split. In this situation, a company issues more shares to its current investors. In a 3-for-1 forward split, if you had 10 shares of a company before the split, you would have 30 shares after the split. The value of your investment won’t change, but each share will be worth less than before. A forward split increases the number of shares, but each share has a lower price, meaning the company’s total market value stays the same.
Reverse Stock Split
A reverse stock split works the opposite way. Instead of giving investors more shares, a company reduces the number of shares. In a 1-for-3 reverse split, if you had 30 shares before the split, you would have only 10 shares after. A reverse stock split usually happens when a company’s stock price has dropped significantly. It’s a way to increase the share price by reducing the number of shares.
Stock Split Ratios
The stock split ratio tells you how many new shares will be issued in a forward split or how much the number of shares will be reduced in a reverse split. For instance, in a 3-for-1 split, two new shares are created for every one share. If the first number in the ratio is larger (like “3-for-1”), it’s a forward split. If the first number is smaller, it’s a reverse split.
Why Do Companies Split Their Stock
The main reason companies split their stock is to make shares more affordable for smaller investors. By lowering the price per share, companies can attract a larger group of potential buyers. While the stock split itself doesn’t change the total value of an investor’s holdings, it can increase demand because lower-priced shares are more accessible.
Stock splits can also reflect management’s confidence in the company’s future. When a company splits its stock, it might show that the company is doing well, which can increase investor interest and cause the stock price to rise.
What Happens During a Stock Split
There are three important dates when a company announces a stock split:
- Announcement Date: The company publicly shares its plans to split the stock, including the ratio and the dates for the split.
- Record Date: This is when investors must own shares to be eligible for the split. If you buy shares after this date, you won’t get the new shares.
- Effective Date: This is when the new shares appear in investors’ accounts, and the share price is adjusted.
Examples of Recent Stock Splits
Some companies that have recently done stock splits include NVIDIA, which did a 10-for-1 split in June 2024, Sony Group, which did a 5-for-1 split in October 2024, and Tractor Supply Co., which also did a 5-for-1 split in December 2024.
Conclusion
While stock splits don’t change the total value of a company, they affect the number of shares and the price per share. They can make stocks more accessible to small investors, which might increase demand and impact the stock price.
