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Because while logically the price is irrelevant, in practice is isn't. Prices below $5 often indicate that a company is in trouble. Which I think is what the
by kwsmith 10y ago
Because while logically the price is irrelevant, in practice is isn't. Prices below $5 often indicate that a company is in trouble.
Which I think is what the unfairly downvoted comment above was referring to.
- tome 10y ago> Prices below $5 often indicate that a company is in trouble. Really? What are you basing that on?
- nathank 10y agoJust read the comments below before posting again.
- imtringued 10y agoWhich comments? You do realise that the order of comments is influenced by votes and how recentley they were created? Either give us a proper explanation or a link to the comment you are refering to. Stock splits are only about convenience. Imagine if all we had are $100 bills. Buying groceries will be quite a hassle. The government then decides to do a split and let everyone exchange their $100 bills with 10 $10 bills. Everyone still has the same amount of cash but it's now easier for the average consumer to buy their groceries. How would the existence of a $10 bill mean the economy is in trouble?
- brianwawok 10y agoThis is a too simple analogy. Some exchanges wont list a stock if it's under $1. Some brokers wont let you short under $5. If grocery stores took no bill smaller than $1 , would you really want to cash your $10 bill into pennies?
- lottin 10y agoA stock is just an arbitrary fraction of the capital stock, therefore the price in absolute value of a single stock is completely irrelevant. Suppose a company has a market value of $1,000. The company can divide its stock into 1,000 one-dollar shares, or into 500 two-dollar shares. Either way in makes no difference as far as the total worth of the company goes.
- the_holy_grail 10y agoThank you for the elementary school lecture. You are completely right: This is why companies are so eager to do a stock split at $6. It's all just arithmetic!
- reddytowns 10y agoThe NASDAQ market, which AMD is in, and the NYSE require that the price of its stocks are traded at or over $1 to avoid delisting.