I know there are lots of investors here, I have a dumb question. If a company announces a 5 for 1 forward stock split, that essentially means that if I had 10 shares, I will now have 50, correct? If the value on the day the stock split was announced is $20/share, does the value per share change when the split happens…or do I suddenly go from having $200 (10 shares @ $20/share) to $1000 (50 shares @ $20/share). Or, does the value per share drop to 1/5 what it was the day the split was announced – and if so, when does that happen?
Total value of the stock remains the same; number of shares multiplies while the price per share goes down.
Is there any way to know when the price per share will drop? The split was announced yesterday, but I do not see this information in any of the details about the split.
If the share is currently $20, then the new price will be $4. What is the actual price? A company typically does not like its shares to be less than $5.
Yesterday it opened at $20. At this moment, $23.
“The Board of Directors has approved a 5-for-1 forward split of the Company’s common stock, effective on the record date of January 28, 2008.”
I’m interested in buying. I don’t want to buy today at $23 only to see that share drop to 1/5 its value (I assume I missed out on the split because I didn’t own the stock yesterday).
If you pay $23/share for one share, you’ll get four more shares when it actually splits. You don’t have to worry about getting screwed like that. It does seem a little odd that a stock is splitting at $23. Normally stocks split when their prices get too high relative to the rest of the market (like $100 or $150 or something).
Or did the stock trade at $100+ last week, and the new stock will trade at $23? I guess that’s a possibility.
What’s the stock? Given that, any number of people here will give you exactly the correct answer.