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Stock split buys (Nividia, Amazon, etc)

3,458 Views | 18 Replies | Last: 5 mo ago by woodiewood
aggieband 83
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AG
Please explain when it is most beneficial to buy stocks that have announced future stock splits.
Should an investor buy before the split happens or immediately after.
Amazon split last June 6, 2023.
Nividia will split June 7th this year.

I did not buy Amazon.
I want to buy Nividia.
I just do not understand when it most beneficial of when to buy.
EliteZags
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AG
most beneficial to buy 6 months before split
1Aggie99
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83... just my 2 cents.

Shouldn't matter really. If you like and believe in Nvidia especially. With it's rise over the last 4 years trying to time it to save $5-$10 per share here and there doesn't make much sense. However, you are paying a premium right now but again, marginal considering performance.

Two weeks to go, you could wait and see if it pulls back some to a "go number" for you or wait post split. My guess is you will see a bounce on June 10 and that could calm down but it's anyone's guess. Folks wanting in but not at $1000 per share.

Simple answer... if you like it, pick a number and go. This is one wild stock and you could easily be paying 10% more by the time you realize it ain't coming back.
I bleed maroon
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AG
I wrote this a few weeks ago on the stock markets thread on subject of stock splits - take it for what it's worth:

Quote:

OK - let's talk about splits. This is a more global assessment, for the purpose of education for any individual investors on the board (and not directed toward any individual stock or poster). My opinions:

1) It is a FACT that there is no financial impact to a stock that undergoes a split (regular or reverse). The total value of your holdings is identical after the split is announced, and when it actually takes place. THERE IS NO VALUE CREATED FROM A SPLIT.

2) Generally, a stock that has somewhat regular splits is likely to be a good company. Companies whose stock is stagnant are not likely to "need" splits to stay in a preferred trading range. Therefore, stock splits don't make companies great, but great companies often have stock splits.

3) The tangible positive effects of splits are mainly for individual investors, who can more efficiently trade options (i.e. covered calls) on the underlying stock if the price per share is lower. A holder of 50 shares can't write covered calls, while if a 2 for 1 split occurs, they can write calls on a position of 100 shares. It also can lead to more liquidity and availability of shares, which can enable better trade execution.

4) The tangible negative effects of splits are that lower stock prices can potentially allow more stock manipulation, since derivatives are relatively more accessible. Also, even a simple mechanical split does create some minor friction and expense to the company (and therefore the shareholder).

5. Reverse splits are pretty much the opposite argument of the above, and it is generally true that great companies don't have reverse stock splits (because their share value is usually increasing over time). Usually, if a company has repeated reverse stock splits (to maintain ability to trade on the NYSE or NASDAQ, for example), it's a flashing neon sign that indicates "stay away".
YouBet
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I bought Amazon a day or two after the spilt. It's up 45% since I bought it. Brilliant move.
JSKolache
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It is a great time to sell NVDA, not a great time to buy. Look at the all time price chart . That is what a bubble looks like and it will pop.
jamey
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JSKolache said:

It is a great time to sell NVDA, not a great time to buy. Look at the all time price chart . That is what a bubble looks like and it will pop.


That was my thought. And worst case, after the split I cam buy back in at 10% increments instead of caughing up 1K pee share.
Big Baccala
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If you plan on holding, doesn't matter when you buy. My guess is this will be a $1500 (before split) stock this time next year.
Big Baccala
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JSKolache said:

It is a great time to sell NVDA, not a great time to buy. Look at the all time price chart . That is what a bubble looks like and it will pop.
Bubble? Be careful, they have the best technology on the planet and still not a bad P/E.
woodiewood
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pbrancazio said:

JSKolache said:

It is a great time to sell NVDA, not a great time to buy. Look at the all time price chart . That is what a bubble looks like and it will pop.
Bubble? Be careful, they have the best technology on the planet and still not a bad P/E.
Could be, but they are the most dominant company in the most developing technology and their lead is expanding. I bought my first 20 shares at $149 before the last split, 4/1 and have bought more through the last two years and sold a few times when it dropped a little. Firm believer in stop losses to preserve gains.

When it splits I will be buying more after it splits as it will generate more interest from small investors.

This is Nvidia's sixth split with it driving up within a month after each one.

I am working the same thing with Chipotle as it is going to split 50/1. Up about 150%.

Work the stop losses.
YouBet
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AG
woodiewood said:

pbrancazio said:

JSKolache said:

It is a great time to sell NVDA, not a great time to buy. Look at the all time price chart . That is what a bubble looks like and it will pop.
Bubble? Be careful, they have the best technology on the planet and still not a bad P/E.
Could be, but they are the most dominant company in the most developing technology and their lead is expanding. I bought my first 20 shares at $149 before the last split, 4/1 and have bought more through the last two years and sold a few times when it dropped a little. Firm believer in stop losses to preserve gains.

When it splits I will be buying more after it splits as it will generate more interest from small investors.

This is Nvidia's sixth split with it driving up within a month after each one.

I am working the same thing with Chipotle as it is going to split 50/1. Up about 150%.

Work the stop losses.

Holy ***** How in the f'ing world is Chipotle's stock at $3,100???? Missed that one.
Diggity
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You know you can buy incremental shares as well
jamey
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Diggity said:

You know you can buy incremental shares as well


I tried to, did not work in my 401K
woodiewood
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Although most people can buy partial shares, one reason that companies split is for their employees. It gives the employees the ability to purchase whole shares in their investment plans and also gives the company to give bonuses of whole shares rather than partial shares. Value-wise, no difference.

"Stock splits are generally done when the stock price of a company has risen so high that it might become an impediment to new investors. Therefore, a split is often the result of growth or the prospects of future growth, and it's a positive signal for the company."

"Bank of America's research shows that stocks have managed 25% total returns in the 12 months after a stock split historically, compared with 12% for the S&P 500."

My projection is that after Nvidia splits, given its growth projections and dominance of the industry, by June 2025, if not sooner, it will be up 20+ % above the split price.
Diggity
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retail traders that can't afford whole shares (and/or aren't eligible for fractional shares) is such a meaningless rounding error for a company, I just don't see how this would increase the value of a company.

Splits are psychological. I guess if enough of the public believes they're a bullish sign...it becomes a self-fulfilling prophecy.
LMCane
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keep in mind that currently NVIDIA is too expensive to really play in the Dow Jones

when it moves down to $135 per share- that gives it a great chance to get into the Dow Jones which means even more funds flowing into it!
YouBet
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Diggity said:

retail traders that can't afford whole shares (and/or aren't eligible for fractional shares) is such a meaningless rounding error for a company, I just don't see how this would increase the value of a company.

Splits are psychological. I guess if enough of the public believes they're a bullish sign...it becomes a self-fulfilling prophecy.


Companies all but acknowledge it's psychological. Several of the articles I've read on the NVIIDA and Chipotle split essentially say that.
woodiewood
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LMCane said:

keep in mind that currently NVIDIA is too expensive to really play in the Dow Jones

when it moves down to $135 per share- that gives it a great chance to get into the Dow Jones which means even more funds flowing into it!
The just added Amazon last year and they are a large cloud player and also Apple, Cisco Systems, Microsoft and Intel are in the Dow 30. I doubt they add Nvidia unless they replace Intel?
woodiewood
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YouBet said:

Diggity said:

retail traders that can't afford whole shares (and/or aren't eligible for fractional shares) is such a meaningless rounding error for a company, I just don't see how this would increase the value of a company.

Splits are psychological. I guess if enough of the public believes they're a bullish sign...it becomes a self-fulfilling prophecy.


Companies all but acknowledge it's psychological. Several of the articles I've read on the NVIIDA and Chipotle split essentially say that.
Absolutely, but the market moves on both fundamentals and on emotions....both directions.
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