"I do see a split as opening the door to people who would buy it at 55 a share vs 110."
Of course, if the assumption that split shares will appreciate faster than non split shares, wouldn't it be more profitable to purchase BEFORE the splt?
"Theoretically, you're right. But in practice it does tend to boost the price."
For how long??? Ultimately, for a company like JNJ, the fundamentals drive the share price. If one was planning to sell shares and all of a sudden a stock split is announced and uninformed "investors" clamor over themselves to buy "cheaper" shares, they make be able to take advantage of a short term pop.
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I don't care either way really. I do see a split as opening the door to people who would buy it at 55 a share vs 110.
"...splits do increase the liquidity of the stock..."
Fair point, but it really applies to much smaller float stocks.
IMO, JNJ is plenty liquid.
I'm long a $156M market cap stock. Current share price is 9.64.
It has split its shares twice, bot times 2 : 1. First split occurred when shares were around 40 bucks, second around 14 bucks. Current shares outstanding: 16.2M with 4.3M float. Average volume is 15K. Had no splits occurred, these numbers would be about a fourth lower. As you noted, the splits have increased the liquidity, and IMO, this is a good thing. As far as the share price benefiting from splits......
Who cares if they split. You will have twice the shares at half the price. Companies with share prices in the 100s of dollars is common. Having twice as many shares will not make your investment increase in value any more than if they don't split. The company is valued on PE ratio, growth and dividend. Having a "cheaper" share price doesn't help.
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To be fair, splits do increase the liquidity of the stock, since it's negotiable in smaller increments. A similar effect happens with options contracts.
So yes, there are small positive effects from a split.