Linkedin stock split history how to#

Accordingly, Airbnb’s board of directors decided to split the stock on a two-for-one basis prior to the IPO.

In the case of Airbnb, the fair market value of the stock had risen 10.4% from the end of the second quarter to the end of the third quarter of 2020 according to reports with Bloomberg ( Bloomberg). Because most companies going public want to raise a certain amount of capital, it’s important that a high stock price per share not drive away investors. A reason for splitting the stock prior to an initial public offering could be that the value of the stock’s price per share will be too high to entice new investors when the stock first hits the open market. Other companies, such as Airbnb, split privately-held stock to prepare for an initial public offering. According to a Yahoo! Finance article, $1,000 invested in Apple in 2011 would be worth close to $11,000 today ( Yahoo! Finance). So far, caring for the little guy seems to be working for Apple. When asked what he thinks about stock splitting, Apple’s CEO Tim Cook is quoted as saying: “Hey, I want more people in the stock.” CNBC’s Jim Cramer has praised Apple in the past for caring about the “little guy” when it comes to managing its stock price per share ( CNBC). “The stock split on a 4-for-1 basis on August 28, 2020, a 7-for-1 basis on June 9, 2014, and split on a 2-for-1 basis on February 28, 2005, June 21, 2000, and June 16, 1987” ( Apple). A stock trading at $1,000 might be too expensive for some potential investors, but a two-for-one split to drop the price to $500 per share may make the shares more affordable.Īpple has averaged a stock split every eight years since going public in December of 1980. The decision to split the stock is ultimately a strategic move guided by the board of directors to make the stock more liquid, attractive, and attainable to investors ( Forbes). This is exactly like trading one $10 bill for two $5 bills. Before the split, the shareholder held one share valued at $1,000 and now the shareholder holds two shares valued at $500 each. Thus, the total value of her holding with the company is unchanged. In a two-for-one stock split, the shareholder who holds one share of stock valued at $1,000 would have her share split into two shares of stock valued at $500 each. To solve this issue, corporations may decide to split the stock. At this elevated price, the corporation recognizes that it is losing potential new investors who do not want to buy in at the high price per share. After ten years of growth and successful business operations, the stock now trades at $1,000 per share.

Imagine that ten years ago an investor purchased a share of stock for $100.

Linkedin stock split history how to#

This article provides guidance to organizations on the basics of stock splits as well as how to explain a stock split to a key subset of shareholders for many startup firms: the employees. Merriam-Webster defines split as “to divide into parts or portions: such as to divide between persons.” Dividing between persons sounds like taking from one person to give to another, something shareholders unfamiliar with stock splitting will likely shy away from. “Stock split” can be an unwelcome phrase to a shareholder, especially one who is unfamiliar with financial terminology.