Google - they should split the stock

[sportsmadness80]

The only thing I have to say about Google is they should split the stock and allow more investors. The stock is way too high. More stockholders at a reasonable $20 or $30 range would be better. For a beginner this stock is unreachable. I use mostly Yahoo, but I have alot of friends that use Google. Personally, I dont see all the hype for that search engine. I would like to see more talk about the start-up stocks $10 and below that have potential. Jim talked about the resurgence of JDSU and I like that kind of talk. Some of the most killer stocks started at pennies then became huge.

[loslobos71]

The only thing I have to say about Google is they should split the stock and allow more investors. The stock is way too high. More stockholders at a reasonable $20 or $30 range would be better. For a beginner this stock is unreachable. I use mostly Yahoo, but I have alot of friends that use Google. Personally, I dont see all the hype for that search engine. I would like to see more talk about the start-up stocks $10 and below that have potential. Jim talked about the resurgence of JDSU and I like that kind of talk. Some of the most killer stocks started at pennies then became huge.

You have to remember that owning 3 shares of a $300 stock is the exact same as owning 30 shares of a $30 dollar stock. Look at it this way: if the $300 company announces good news, it goes up 10%, so you make 3 x $30= $90. If the $30/shares company announces the same exact news, it too will go up 10%, which is 30 x $3= $90. See, your profit is the same. And remember that JDSU is not a "small" stock just because it is a under $4 a share. It has a market cap of $6.22 billion dollars. In fact that is in mid-large cap territory. If JDSU did a reverse split and the share price was $30, it would be the exact same size, the same fundamentals, and the same company.

Good luck

[mhertz]

that is true, nonetheless, there is merit in stock splits (and reverse stock splits). it's a psychological thing -- investors are more willing to have 10 of something than 1 of something even if the aggregate cost is the same.

[optimus25]

all true. but lets not forget Buffet's Berkshire Hathaway, which has never split.

Correction on the stocks that started from pennies. On a split adjusted basis the stocks started as pennies. When was the last time you saw an IPO at less than $5?

[sportsmadness80]

Thanks for the feedback and keep it coming. All the comments entered so far interesting and I like that. Makes you think about other angles and I appreciate that.

[zyzzyva57]

One of those things I knew but did not realize I knew :) Cramer uses the analogy of breaking a pencil in half, to wit, you do NOT really have 2 pencils--You make this even clearer...But it does affect the eps, doesn't it, then the p/e metrics? Can you clarify this aspect for this Newbie how Wall Street would see it?

[loslobos71]

One of those things I knew but did not realize I knew :) Cramer uses the analogy of breaking a pencil in half, to wit, you do NOT really have 2 pencils--You make this even clearer...But it does affect the eps, doesn't it, then the p/e metrics? Can you clarify this aspect for this Newbie how Wall Street would see it?

happy to help. No it does not affect p/e. If its the $300 stock earnings $10 a share, it has a p/e of 30. If the stock does a 10:1 split, its now a $30 stock with $1 a share in earnings, which gives it a p/e of 30.
As someone else said it has a phycological impact on investors and may help it that way over time. WIth the case of Google I think that people (the media) would stop talking about it if it was a thirty dollar stock, it would be "the same" as Yahoo, Broadcom, Marvel, etc. and it would be bad for the stock. Usually I dont care about the dollar amount of a stock, I just cared about p/e, etc. but it always cracked me up to see a $160 supermarket! (WFMI)

Good Luck

[zyzzyva57]

Obviously the eps and p/e would remain the same, but boy, it does take some thinking to grasp this. It is so not obvious. Here's another question: a stock can only be split AFTER the market sets an IPO price then? After this, the stock can be sliced and diced by the financial people of a company if they so decide? As in the case of Google, there would be a jab up in price in a stock split, but ultimately, the stock price would be trading the same as before the split?

[William Rennick]

The only thing I have to say about Google is they should split the stock and allow more investors. The stock is way too high. More stockholders at a reasonable $20 or $30 range would be better. For a beginner this stock is unreachable. I use mostly Yahoo, but I have alot of friends that use Google. Personally, I dont see all the hype for that search engine. I would like to see more talk about the start-up stocks $10 and below that have potential. Jim talked about the resurgence of JDSU and I like that kind of talk. Some of the most killer stocks started at pennies then became huge.

That would be brilliant, then there would be twice as much crap.
...Reniick

[madcowdisease]

all true. but lets not forget Buffet's Berkshire Hathaway, which has never split.

Correction on the stocks that started from pennies. On a split adjusted basis the stocks started as pennies. When was the last time you saw an IPO at less than $5?

LOL, who's got 80+K to dump on one stock. Could explain the low volume ya think?

[sportsmadness80]

[QUOTE=zyzzyva57]One of those things I knew but did not realize I knew :) Cramer uses the analogy of breaking a pencil in half, to wit, you do NOT really have 2 pencils--You make this even clearer...But it does affect the eps, doesn't it, then the p/e metrics? Can you clarify this aspect for this Newbie how Wall Street would see it?[/QUOTE

:eek: Ok so I was not born into the Wallstreet jargon but cant a person learn without being called a newbie. I mean what the heck I dont pretend to know everything but I made a few moves and mad at least $800 in two days. Not anything to quit over but it was money I didnt have before. At least some of the posters made gave me a better perspective on the value of a stock versus just dwelling on the cost.