"Stock splits often spark investor excitement, drawing attention to companies that appear more accessible with lower per-share prices. This buzz can drive short-term price gains as retail investors pile in, viewing the move as a sign of confidence from management. However, a split does not alter the ( company's underlying fundamentals, such as revenue growth, profitability, or market position - it simply increases the number of shares outstanding while proportionally reducing the price."
"These are frequently associated with troubled companies facing delisting risks, but they are not always a death knell. Some have staged remarkable recoveries: CitigroupNYSE:C) executed multiple reverse splits during the 2008 financial crisis yet rebounded to become a banking powerhouse; AIGNYSE:AIG) underwent a 1-for-20 reverse split in 2009 amid its bailout but later returned to profitability; and Booking HoldingsNASDAQ:BKNG) (formerly Priceline) pulled off a 1-for-4 reverse in 2002 before evolving into a travel giant."
Stock splits frequently generate investor excitement by lowering per-share prices and attracting retail buyers, often producing short-term price gains. Splits do not change a company’s fundamentals such as revenue growth, profitability, or market position; they simply increase the number of shares outstanding while proportionally reducing the price. Some firms avoid splitting to preserve long-term value despite high share prices. Forward splits commonly signal strong performance and broaden ownership, while reverse splits consolidate shares to raise prices for listing requirements or institutional interest and often reflect distress. Several companies later recovered after reverse splits. Palo Alto Networks executed a 2-for-1 forward split following robust fiscal performance.
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