Stock-Split Watch: Is MicroStrategy Next?
Stock splits are mostly a magician's flourish for investors. They do not change the substance of the Stock being split but somehow make everything seem more accessible and, by some measures, more exciting.
You're simply cutting the same business ownership into a different number of slices, usually increasing the share count and lowering stock prices. The total value of the stock itself or the holdings in your brokerage account remains the same. For instance, let's say you own a stock priced at $400 per share. If the board of directors decides to execute a 4-for-1 stock split, you'll now have four shares worth $100 each.
But it's not all accounting smoke and mass psychology mirrors. Not every investor has the option to buy fractional shares, and it's just more comfortable to keep track of stock prices in a comfortable price range.
Source Fool.com
