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".

---

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.

---

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.

---

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.

---

Diggity said:

---

You know you can buy incremental shares as well

---

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.

---

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!

---

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.

---