The best way of learning in my opinion is via examples and real examples often work best. Obviously in the past few months, we have seen google do a stock split of 20-1 which got the stock from 3k a share to $150, Tesla did this and more recently I’ve heard rumors about AMC.

So let’s break down what a stock split is, how it works and if it helps the business anyway

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Benefit is it creates liquity ( but you could issue out a class B share to help those owner that want to get out and need the cash )

The people that bUy at those prices: most likely are more longer term

The people that buy a lesser price are more likely to be more liquid in their investments

Today we have fractionals share investing these days

Their no difference between a stock selling for $1000 and a stock selling at $10

Warren: attrats the right shareholders,

Charlie: liquity actually helps with those crazy booms, illiquid doesn’t mean bad incestments look at real estate

The reason people get excited about stock splits : is because they know it tends to increase share price in the short term ( usually around 8-16% over 12 months return)

It doesn’t change the underlying business or the ownership or make anyone really more wealthy. So what does it do.

Example with pizza, home made business and Charlie who wants to join but doesn’t have the money or billy who wants to sell but has liquidity troubles ( 2 days later Charlie wants to sell )

If you were running a business ( would you want people to be able to join for $1)

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*Some of the links and other products that appear on this video are from companies in which Tommy Bryson will earn an affiliate commission or referral bonus. Tommy Bryson is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. I’m an Accountant but I’m not your Accountant, always review information with your Accountant/CPA and your Financial Advisor.

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