Always keep an eye on stock splits.
While splits don’t change the value of a stock, they can serve as a positive signal. This can then lead to further liquidity and more investor interest. After all, if an attractive $500 stock were to split 10:1, bringing it to $50 a share, more investors are likely to jump in.
Plus, according to Morningstar.com, “Splits matter – because these stocks outperform after the announcement, by a lot. Average returns one year later are 25% vs. 12% for the S&P 500 SPX as a whole, say researchers at Bank of America. It’s worth brushing up on stock splits now, for two reasons. Stock splits are picking up again after a decade-long lull.”
Look at Booking Holdings (BKNG).
Booking Holdings, which trades at $4,286, will split its shares 25:1 after the market closes. on April 2. That should help lower the stock price to about $171 a share.
The stock – up about 25,000% over two decades – will now be far more accessible to all investors not wanting to spend $4,286 for a single share. Better, the stock could take off again thanks to its overwhelming strength.
And while it did see mixed earnings with an EPS loss, total revenue was up 15.5% year over year to $6.35 billion. “Gross bookings rose 11% on a constant-currency basis to $43.0B. Room nights rose 9% year-over-year, rental car days increased 4%, and airline tickets were up 28%. Total merchant bookings increased 27.2%, while agency bookings were down 5.7%. Alternative accommodation room nights at Booking.com increased by about 9% during the quarter,” added Seeking Alpha.
Sincerely,
Ian Cooper
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