Walmart Inc recently has announced to split it’s share of stock. This stock split will at 3:1 ratio, which means that the shareholders will get 3 stock for 1 stock. This is first time since 1999 that stock split of wallmart has taken place.
The company said that the stock split would increase the number of outstanding common stock from nearly 2.7 billion to 8.1 billion.The additional share will become payable after the market closes on Feb 23.
Why did Walmart announced this split?
Walmart has said that this Walmart stock split is taking place for two reasons.
(1) The company think that this stock split will be improving the liquidity of its stock.
(2) This split of walmart stock will be making the stock more affordable to the employees to purchase walmart`s stock through it’s employee stock purchase plan.
How will this stock split be effecting the investors?
This split only means that in case you own this company’s share you will get three additional share for each these shares.
Benifits of this stock split?
Stock split can increase stock’s liquidity as it make it easier to buy and sell share. A lower share price can also make the stock more appealing to investor. Some investors believe that a lower share price makes the stock more affordable and that’s why becomes more appealing to investors.
Potential risks?
The stock may experience a volatility which is short-term. Also what needs to be kept in mind that stock split doesn’t change the fundamental or any sort of financial performance. Some investors also misunderstand the impact of stock split and start thinking that it makes company more valuable.
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