Stock splits can serve as a surprising but potent indicator for investors, signaling increasing interest and potential for liquidity. For example, Palo Alto Networks recently split its stock from $400 to $200, making it more accessible to investors. Additionally, research from Bank of America shows that stocks that split tend to outperform the S&P 500 significantly, with average returns of 25% compared to 12%. After years of low activity, splits are becoming more common again, indicating a resurging interest among prominent companies in the market.
Stock splits don't change the value of a stock, but they can indicate a positive signal, leading to greater liquidity and increased investor interest.
According to Bank of America, stocks that experience splits outperform the market one year later, achieving average returns of 25% compared to the S&P 500's 12%.
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