3MT: What Is A Stock Split?

TRANSCRIPT:

3 MINUTE TAKE: What’s A Stock Split?

Definition:

Tell Me More: 

Why Should I Care About Stock Splits??:

1. Level The Playing Field:
   A stock split is a great equaliser as a wider range of investors can access a profitable company now that the price point of a share is considerably reduced. 
2. Real Life Example: Apple Inc
   • Apple’s stock price was US$500 per share before a 4-1 stock split in August 2020, which reduced the cost per share to US$125.
   • This 4-1 stock split gave a wider range of investors access to the profitability of this renowned company. 
3. Can I Invest In Apple, Inc?
   • FSL clients have the option of investing in the US stock market – inclusive of Apple Inc – and other high-performing multinational companies.
   • Our clients welcome the advantage of expanding their investment portfolio outside of the local and regional markets. 

What Does A ‘Stock Split’ Look Like?

A Local Example: MASSY HOLDINGS

• Massy Holdings has announced a stock split of 20-1! The stock was previously priced at $109TTD. This 20-1 will reduce the price to ~$5.46 TTD
• The number of shares in issue will multiply from 99 million to 1.99 billion units!

Why Would A Company Do A Stock Split?

A Local Example: MASSY HOLDINGS

• As with Apple, Inc, a stock split gives more investors access to Massy Holdings
• Stock splits also have the potential to make Massy’s stock more liquid and easier to trade, thereby making it more attractive and potentially driving up the price. 

How Can I Take Advantage Of A Stock Split??

1. Is The Risk Worth It?:
   • Stock splits are great opportunities to expand your portfolio, however, risk is still a major factor that must never be ignored when investing.
   • No stock is a 100% sure thing. So a lower stock price is not a guarantee that investing in Massy or Apple is a great fit for your investment goals. 
2. How To Know If A Stock Split Is Good For You:
   • It’s best to talk to your financial advisor about your wishes and concerns.
   • At Firstline Securities, we create wealth for our clients. Our investment solutions are tailored per client, because we know everyone isn’t investing just for retirement. 
   • At FSL, we understand that our clients are nuances with genuine and unique financial goals. This is why an investor’s decision to invest should depend on whether it aligns with their investment goals. 
   • An open conversation with your investment advisor should determine whether you should participate in Massy Holdings’ or even Google’s upcoming stock split. It’s worth looking into. 
   • Talk to your advisor today about any upcoming stock splits. 

Three Minute Take. At FSL, we create wealth. Become a client to create a tailored investment portfolio that suits you and your loved ones well. Contact us today!