Timeline for Why doesn’t the stock price fall after the record date for a company splitting stock?
Current License: CC BY-SA 4.0
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| Jul 1, 2021 at 13:44 | history | edited | Bob Baerker | CC BY-SA 4.0 |
Fixed typo
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| Jul 1, 2021 at 13:43 | comment | added | Bob Baerker | Let's ignore share price movement before and after the split as well as the details about record date, ex-date and pay date. If a $100 stock splits 4 for one, if you own 100 shares (worth $10k), when it splits, you end up with 400 shares at $25, also worth $10k. The simple answer is that if you pay the pre split price, you participate in the split. If you pay the post split price, you do not participate. There are no free lunches. | |
| Jun 30, 2021 at 12:52 | comment | added | Joe | Thanks for the response. I understand that- and I know that the split doesn’t affect the value of the company. My question is more along the lines of timing of buys and sells though to take advantage of the dividend. It could also be looked at by asking why anyone would buy the shares after the record date and before the split goes into effect- they would pay full price and immediately have the value slashed upon the split date as they don’t receive the dividend. | |
| Jun 30, 2021 at 10:13 | history | answered | mhoran_psprep | CC BY-SA 4.0 |