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The company has split its stock twice in the last five years: a 4-for-1 split in 2021 followed by a 10-for-1 split in June of this year, bringing its share price to a more affordable $118.
The free market dictates the price of every publicly traded company’s stock. All share prices exist at the intersection of what the seller is willing to accept and what the buyer is willing to pay.
Corporate actions such as stock splits or reverse stock splits increase or decrease the number of outstanding shares to decrease or increase the stock price respectively. Buybacks are another example of influencing the stock price where a corporation buys back shares from the market in an attempt to reduce the number of outstanding shares ...
The acquiring corporation then makes a tender offer at an amount slightly higher than the current target corporation' stock price. If the tender offer succeeds, the acquirer gains control of the target and merges its assets into the new subsidiary corporation.
By the mid-2000s, roughly 5% of the Russell 1000 members split their stock each year, and after the great financial crisis from 2008-2009, stock splits practically ceased.
When a stock splits, many charts show it similarly to a dividend payout and therefore do not show a dramatic dip in price. Taking the same example as above, a company with 100 shares of stock priced at $50 per share. The company splits its stock 2-for-1. There are now 200 shares of stock and each shareholder holds twice as many shares.
A corporation can adjust its stock price by a stock split, substituting a quantity of shares at one price for a different number of shares at an adjusted price where the value of shares x price remains equivalent. (For example, 500 shares at $32 may become 1000 shares at $16.) Many major firms like to keep their price in the $25 to $75 price range.
Nasdaq requires companies listed on its exchanges to maintain a closing price above $1. Penny stocks typically sell for less than $1 a share. If the company's stock price doesn't climb above $1 ...