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. (NASDAQ:AMZN) 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 (NYSE:C) 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. (NASDAQ:SGH) 20:1
ACM Research Inc (NASDAQ:ACMR) 3:1
Empire Petroleum Corporation (NYSE:EP) 1:4
P.A.M. Transportation Services, Inc. (NASDAQ:PTSI) 2:1
Tootsie Roll Industries, Inc. (NYSE:TR) 1.03:1
Enovis Corp (NYSE:ENOV) 1:3
MFA Financial, Inc. (NYSE:MFA) 1:4
Prenetics Global Ltd (NASDAQ:PRE) 1.29:1
A-Mark Precious Metals Inc (NASDAQ:AMRK) 2:1
Brookfield Infrastructure Corp (NYSE:BIPC) 3:2
DexCom, Inc. (NASDAQ:DXCM) 4:1
Invesco Mortgage Capital Inc (NYSE:IVR) 1:10
Kinetik Holdings Inc (NASDAQ:KNTK) 2:1
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