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Stock Market Question

A

austin316

Diamond Member
Ok, take for example Best Buy, which went Public in 1985. Since then the stock has split 8 times. So if you bought 1 share in 1985, would you know have 256 shares if you never sold?

Also, why is the price of shares not cut in half when then split. For example, looking at the chart for BBY, when it splits, the price stays the same. So that means one day I have 100 shares at $5 and the next day I have 200 shares at $5 AND NOT 200 at $2.50.
 
assuming the split ratio is 2:1, you'll have 256 shares from your pathetic 1 share.

the chart has been readjusted post-split.
 
Uhm, when it splits in half (one way a split could occur), the price does halve. Generally speaking, if the stock is healthy, after the split it will climb back to where it was.

EDIT: What Noirish said too.

The reason for a split is to create more shares of the company, to raise more capital. So if a split occurred, and your stock had doubled in price, they wouldn't be making any more money.
 
When a stock splits, both the price and number of shares change.

If you have 100 shares at $10, and it splits 2:1, you now have 200 shares at $5.00.
 
On the other hand, if they go reverse split on you, say 1:10, your 1 share will be returned to you in cash.
 
If you have an older Best Buy (in the upper mid west) you'll probably see that your store has 7 or 8 guys who are the same people who worked there 15 years ago. Regular Best Buy employees made a killing during the 90's when the stock skyrocketed.
 
Stocks will split to make it more affordable for more investors.

Many more people will buy a $50 stock than a $100 stock.
 
Berkshire Hathaway has never split since it was founded in the 60's. The stock is now over $90,000 per share.
 
Originally posted by: PowerMacG5

The reason for a split is to create more shares of the company, to raise more capital. So if a split occurred, and your stock had doubled in price, they wouldn't be making any more money.
Click to expand...

I thought the reason for the split was to bring the price down to a range that is more affordable to investors, so more people will be able to invest... as opposed to Berkshire Hathaway which is like $80k a share.

Edit: http://www.google.com/finance?tkr=1&q=BRK.A
$90k
 
Originally posted by: mugs
Originally posted by: PowerMacG5

The reason for a split is to create more shares of the company, to raise more capital. So if a split occurred, and your stock had doubled in price, they wouldn't be making any more money.
Click to expand...

I thought the reason for the split was to bring the price down to a range that is more affordable to investors, so more people will be able to invest... as opposed to Berkshire Hathaway which is like $80k a share.

Edit: http://www.google.com/finance?tkr=1&q=BRK.A
$90k
Click to expand...

Maybe a little from Column A and a little from Column B?
 
Well get this then. If you bought 1 share at Best Buy's IPO, it would have cost you 16 cents and it would now be worth $13,000+

That is crazy!!!!!!

 
The only time the company gets money is from the IPO... tho they can do seasonal offerings to raise money...
 
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