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Questions and Answers
Which company had a notable increase in retail buying after its 4-for-1 stock split in July 2020?
What is the primary psychological effect of stock splits according to Peng Cheng?
How much did retail investors purchase in Apple stock each week after its stock split announcement?
What could be a potential consequence of Alphabet's stock split according to analysts?
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Which of the following companies executed a stock split prior to 2020?
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What index would likely consider Alphabet for inclusion following the stock split?
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What was the approximate share price of Alphabet before the stock split announcement?
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How does a 20-for-1 stock split affect the price of a stock?
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Study Notes
Alphabet Stock Split
- Alphabet Inc. announced a 20-for-1 stock split, following a trend of similar moves by other large companies.
- The announcement came alongside a report of record quarterly sales.
- Alphabet's share price rose by more than 8% following the announcement.
- Other companies that have implemented stock splits since 2020 include Apple, Tesla and Nvidia.
- Between 2017 and 2021, 26 S&P 500 companies executed stock splits.
Stock Split Impact
- Stock splits generally have a psychological effect, making stocks more appealing to retail investors.
- Retail buying surged after both Apple and Tesla stock splits, according to Vanda Research.
- Analysts anticipate a similar increase in retail investor activity for Alphabet following the stock split.
Dow Jones Influence
- Alphabet’s stock split may make it eligible for inclusion in the Dow Jones Industrial Average (DJIA).
- The Dow is a price-weighted index, meaning that high-priced stocks have a larger influence on the index.
- The lower stock price resulting from the split could make Alphabet's shares more appealing for investors.
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Description
Explore the recent 20-for-1 stock split of Alphabet Inc., its impact on stock prices, and the psychological effects on retail investors. This quiz also discusses how such splits may influence eligibility for inclusion in the Dow Jones Industrial Average.
