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Under Armour announced a 2-for-1 stock split that will become effective on April 14 for shareholders of record on March 28. The company last split its shares in July 2012.
Why would anyone care if they invest in a complany immediately before a 2:1 split? Or immediately after for that matter? Their investment will be worth exactly the same regardless of whether they buy just before or just after the split.
Why would anyone care if they invest in a complany immediately before a 2:1 split? Or immediately after for that matter? Their investment will be worth exactly the same regardless of whether they buy just before or just after the split.
True. If it's an attractive enough stock, and it was getting too pricey, the hope will be that it attracts more new buyers at the lower split price. What I don't know is what happens to the stock someone buys between now and April 14? How does that work?
What I don't know is what happens to the stock someone buys between now and April 14? How does that work?
Nothing. There is no deadline to be "eligible" for a stock split. All shares of the stock will split on the effective date regardless of who does or doesn't own it, or when they did or didn't buy it.
While I agree with MadMan above that a split has ZERO effect on the value of a stock, I do believe that you are right about attracting more potential buyers at the lower price. As an example, I believe that when Berkshire Hathaway split their class B shares 50 for 1, there were probably more buyers after the split at $70 than there were before the split at approx $3,500. It's more of a psychological thing with unsophisticated investors than anything else, but real nonetheless.
Last edited by treasurekidd; 03-28-2014 at 06:32 PM..
Nothing. There is no deadline to be "eligible" for a stock split. All shares of the stock will split on the effective date regardless of who does or doesn't own it, or when they did or didn't buy it.
While I agree with MadMan above that a split has ZERO effect on the value of a stock, I do believe that you are right about attracting more potential buyers at the lower price. As an example, I believe that when Berkshire Hathaway split their class B shares 50 for 1, there were probably more buyers after the split at $70 than there were before the split at approx $3,500. It's more of a psychological thing with unsophisticated investors than anything else, but real nonetheless.
What do they mean when they say "will become effective on April 14 for shareholders of record on March 28?"
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