Stock Split Watch: Is Super Micro Computer Next?
Super Micro Computer (NASDAQ: SMCI) has been one of the hottest stocks on the market in 2024, as shares of the server manufacturer have already more than doubled this year thanks to an impressive set of results that points toward a massive acceleration in its growth. What's more, Supermicro stock has shot up a whopping 6,900% since it went public back in August 2007, outpacing the S&P 500 index's jump of 249% by a huge margin.
The massive gains that the company has clocked over the past 17 years have brought its stock price to more than $615. That's way higher than Supermicro's initial public offering (IPO) price of $8 per share. Will this encourage Supermicro's management to execute a stock split and lower the share price?
A stock split doesn't affect the stock owner's share of the company, it just divides that share into bigger or smaller pieces. It also does nothing to alter the fundamentals of the company that is splitting the shares. For example, if you hold two shares of company X with each being priced at $10, the total value of your holdings stands at $20. If company X decides to execute a 2-for-1 forward stock split, you will now own four shares following the split and each share will be priced at $5. So, the total value of your holdings in company X will remain at $20. The company's value remains constant throughout, only the number of shares changes.
Source Fool.com
