In the 1970s, 80s and 90s, companies would approve a stock split to lower the price of their shares to make the share price more attractive to investors.
If you don’t know what a stock split is, I will explain it to you.
Let’s say you own 100 shares of a stock with a price of $50 per share, and the company decides to split its stock 2 for 1. This means that every shareholder would receive 2 shares for every share they own. So your 100 shares would now be 200 shares at $25.
I’ve noticed something, however, over the past two to three years: companies don’t seem to be interested in splitting their stock anymore.
Here are some examples of what I’m talking about:
Alphabet (NASDAQ: GOOGL): $1,233
Nvidia (NASDAQ: NVDA): $282
Amazon (NASDAQ: AMZN): $2027
Apple (NASDAQ: AAPL): $228.35
Intuitive Surgical (NASDAQ: ISRG): $563 (Just split 2 for 1 a year ago, but it really didn’t help small investors much)
Bookings Holding (NASDAQ: BKNG): $1950
Illumina (NASDAQ: ILMN): $354.84
Align Technology (NASDAQ: ALGN): $388.40
Here is my concern: stocks of great companies are getting pricier and pricier. If you’re not already in the market, you may be at risk of getting priced out, because the trend of companies splitting their stocks has significantly decreased, and as long as the demand for shares continues, there is no incentive for companies to authorize stock splits.