research analysts have concluded stock splits are traditionally bullish for the companies that enact them. They looked at data on S&P 500 stocks going back to 1980 and found that companies that split outperformed the index in the three, six and 12 months after the initial announcement. They gained on average 25 per cent over the next 12 months compared with a gain of 9 per cent for the benchmark index.
That trend hasn’t helped the companies that split this year. Their shares prices are down year-to-date and well off the prices when the splits were announced. Split-adjusted, Shopify has fallen more than 80 per cent to around $43 a share from its 52-week high of approximately $223 as business conditions have deteriorated. Shopifyof its workforce and warned that inflation and rising interest rates will weigh on consumer spending for the remainder of 2022.
Amazon’s shares are 29 per cent below their 52-week high, post-split, at the current price of US$133.22. Alphabet is down 25 per cent at current prices.Elliot Johnson, chief investment officer at Toronto-based Evolve Funds Group Inc., says the broader participation created by the splits has benefits.
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