STOCK SPLITS: A Vital Equity Investing Concept for Physicians and all Investors

Posted on June 8, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

By Dr. David Edward Marcinko MBA MEd CMP™

SPONSOR: http://www.CertifiedMedicalPlanner.org

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One important equity concept that medical professionals should be aware of is the idea of stock splits.

In a stock split, a corporation issues a set number of shares in exchange for each share held by share holders. Typically, a stock split increases the number of shares owned by a shareholder.

CITE: https://www.r2library.com/Resource

For example, XYZ Corp. may declare a 2-for-1 split, which means that share holders will receive two shares for each share that they own. However, corporations can also declare a reverse stock split, such as a 1-for-2 split where shareholders would receive 1 share for every two shares that they own.


While stock splits can either increase or decrease the number of shares that a share holder owns, the most important thing to understand about stock splits is that they have no impact on the aggregate value of the shareholder’s position in the company.

Using the XYZ Corp. example above, if the stock is trading at $10 per share, an investor owning 100 shares has a 24 total position of $1,000. After the 2-for-1 split occurs the investor will now own 200 shares, but the value of the stock will adjust downward from $10 per share to $5 per share.

Thus, the investor still owns $1,000 of XYZ stock. While stock splits are often interpreted as signals from management that conditions in the company are strong, there is no intrinsic reason that a stock split will result in subsequent stock appreciation.

NVIDIA Splits: https://tinyurl.com/238yze4k

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Wither STOCK SPLITS?

Posted on January 11, 2023 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

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A stock split occurs when a company breaks up its existing shares to create a higher number of lower-value shares. Stock splits have the effect of reducing the trading price of a stock, which makes it more liquid and more affordable for investors.

Companies that engage in stock splits often have a nominally high share price, which is typically achieved by executing and innovating on the operating front. Companies within this list have high potential for a stock split, given their nominally high stock price.

CITE: https://www.r2library.com/Resource/Title/082610254

Last year, well over 200 companies announced and implemented stock splits. However, the type of split that excites investors most is a forward stock split. This is where the share price of a company is reduced and its outstanding share count increases by the same magnitude, Thus, there’s no change in market cap. Companies that enact forward stock splits are usually firing on all cylinders and out-innovating their competition.

Reverse: https://medicalexecutivepost.com/2022/10/08/what-is-a-reverse-stock-split/

As we go boldly forward into a new year, two stock-split stocks stand out as amazing values that can confidently be bought hand over fist. Alphabet and Amazon? Meanwhile, another widely owned stock-split stock looks to be worth avoiding in 2023. Tesla?

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