Why does a stock split happen?
Few reasons why a company might split stocks are:
- To signal that good news could be coming soon: It shows confidence in the future of the company.
- To increase market capitalization: After a split, the lower price per share attracts more buyers.
- To be included in the price-weighted indexes like DJIA: Apple engaged a 7 for 1 split in 2004 to be added to the DOW in 2015.
- To increase liquidity: More buyers would buy 10 shares for $10 than 1 share for $100.