Do All These Stock Splits Mean a Market Correction Was Imminent?
Some of the world's biggest and top-performing companies have announced stock splits this year. E-commerce giant Amazon (NASDAQ: AMZN) just completed its 20-for-1 stock split in early June. Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), owner of Google, is set for a 20-for-1 split on July 1. And shareholders of electric vehicle maker Tesla (NASDAQ: TSLA) will meet in early August to approve a 3-for-1 split. That's just to name a few.
These stock splits don't change anything fundamental about the company or its stock. But they do lower the price of each individual share. Companies usually plan a split after their stock has had a great run. So, does this mean the number of stock splits recently was actually a clue that a correction was just ahead? Let's find out.
First, let's talk about why companies split their stock. It's important to see this as an individual decision for a company. It's not a result of the whole market performing well. Instead, companies make the move when their own stock has climbed a great deal -- and reached a price that's probably too high for many investors.
Source Fool.com
