Stock Splits: Unpacking the Hype

There's a lot of buzz around stock splits these days. Nvidia, Walmart, Chipotle - everyone's talking about it! But, as we explained on the podcast, this isn't the financial revolution you might think it is.
A stock split is a simple concept: it's like taking a whole pie and cutting it into more slices. You don't end up with more pie; you just have more pieces. The same is true with a stock split. You don't actually increase the value of your investment; you simply have more shares, each with a lower price.
So why do companies do this? Well, it's all about making their stock more accessible. When a company's stock price gets very high, it can be difficult for the average investor to buy in. A stock split makes those prices more palatable for folks with smaller portfolios. But let's be honest, it's also a bit of a marketing ploy.
Tune into this week’s episode as we answer the question: what does it all mean for you?
Key Takeaways:
-A stock split is like cutting a pie into more slices; it doesn't change the size of the pie, just how it's divided.
-Stock splits don't increase the value of your investment.
-Companies do stock splits to make their stock more accessible and increase trading volume.
-Stock splits don't guarantee future success.
-Focus on the fundamentals of a company, not just the hype around a split.
-Stock splits can offer an opportunity to buy into a good company at a more affordable price, but they’re just a piece of the puzzle.
-Consider your investment goals and risk tolerance when evaluating a stock split.
About the Hosts:
Julien and Kiersten Saunders are the hosts of the rich & REGULAR® podcast. New episodes are published weekly on KZbin, Apple Podcasts, Spotify and other streaming platforms. Julien and Kiersten are also the authors of Cashing Out: Win The Wealth Game By Walking Away, named 2023 best overall book about investing by Business Insider and one of the best personal finance books by Forbes. To learn more and purchase the book, visit richandregular.com/cashingout/
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Chapters
00:00 Introduction and Shoutout
03:11 How Stock Splits work
05:56 Chipotle's CFO on why they did a stock spilt
09:12 Stock Splits help make company stock more accessible for employees
11:00 Stock splits as a way to attract more retail investors
12:57 Stock splits do not change the underlying fundamentals of a company
15:11 What companies are hoping to achieve through a stock split
17:00 Investor psychology impact on stock split outcomes (speculation vs. fundamentals)
20:27 Does it make sense to buy after a stock split?
21:11 Assessing your decision based on your investment goals
23:20 Different strategies for short-term vs. long-term investors
24:06 The Risks and Considerations of Individual Stock Investing
27:17 Investing in Stock Splits: A Balanced Approach
28:38 Closing Remarks and begging for reviews again!

[@rose4u111]

Love the use of the noun “gobbledygook ” in your conversation. I had to refresh myself on the definition…”incomprehensible or pompous jargon of specialists”.🌹

[@richandregular]

Lol. That’ll probably be the last time that word gets dropped.

[@chanreka]

I'm not old enough to use the word whippersnapper however whenever I can I do because the look you get from whoever you're talking to is priceless. 😂 BTW I smiled big hearing my message being read. So honored I could add to the conversation. I'm almost at the table 😊

[@lesliejohnsonrn5558]

Love your explanation. There seems to be a lot of excitement around these splits everywhere at work is buying but you just confirmed for me go the other direction which what I did when the market went down and the talk was don't buy stocks this market makes no sense to this novice investor when I am personally experiencing inflation in groceries and gas and seeing all of the layoffs. But see double digit gains in my investment

[@richandregular]

Good for you. Keep it simple.

[@tymontana3864]

Great Show Guys Love The Content.. We need a Rich & Regular Live Show In 2024..Meet and Greet 🤞🏽🤞🏽

[@richandregular]

A few folks have asked for that and several venues have reached out looking to host. Always seems like a lot of work but…maybe.

[@MisteRRYouTuby]

I see the Chipotle C-suite guy talking but all I hear is, you’re getting less stock through this split for the extra work you did.

[@richandregular]

That part. He finessed his explanation well tho.