Stock splits are back in vogue among big U.S. companies, reviving a debate about whether the practice that had fallen out of favor for years is worth it.
Has any era given birth to more dubious investment mechanisms than today?
For Julian Emanuel, chief equity and derivatives strategist at BTIG, it’s harder to make the case for splitting a stock these days because of the rise of commission-free trading and brokerages offering fractional shares. Those developments “have largely rendered irrelevant the dollar value of a company’s share price,” he said in an interview.
A look at the data backs up the case against splits providing long-term benefits to stock performance. The shares of companies that have split outperformed the S&P 500 on average in four of the last five years in the year the split was announced, according to Bloomberg data. The calendar year following the move, however, those same shares underperformed four of the five years.that other large technology companies like Amazon.com Inc. that boast four-digit share prices may be next.
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