A couple of days ago Google’s parent company Alphabet announced the board approved a 20 to 1 stock split. Google stock went up in after hours trading and climbed yesterday as a result. Prior to the split, the stock was hovering around $2,600 a share. At market close today the price was $2,960 a share in anticipation for the split —although it will not occur until later in the year.
What is a stock split? When companies want to release more shares and/or make their stock price more attainable again, they split the stock. For instance, in the past two years Apple and Tesla stocks have split. As an amateur investor, here are a few key things I think about when it comes to a stock split:
- If you do not already own a high value stock that is about to split consider purchasing it — Sometimes a stock will grow in value prior to the split and you can take advantage of those gains. This gains will also increase the value of each of your new shares after the split.
- Sometimes the value of the new shares of stock will dip initially after the split—After the initial split many investors will sell off some shares and take advantage of the gains prior to the split
- Remember your financial goals — You need to understand when purchasing any stock what your short term and long term goal for that stock is. Do you want to hold on to it long term or are you seeking more short term gains?
