Re:Tesla 5-1 Stock Split
by rich_sasha on Tuesday August 11, 2020 @05:38PM
(#24126312)
There are weird incentives for this.
In US the tick size for any stock is always $0.01. So a stock with a price of say $1 has a minimum bid ask spread of 1%, which is a lot.
On the contrary, if one share is too expensive, it limits liquidity in a stock. This is usually bad, though Berkshire Hathaway voting shares are deliberately kept expensive to stave off speculators.
This then get meta-player. A split suggests the company expects a price increase, and vice versa (reverse splits area thing too).
In US the tick size for any stock is always $0.01. So a stock with a price of say $1 has a minimum bid ask spread of 1%, which is a lot.
On the contrary, if one share is too expensive, it limits liquidity in a stock. This is usually bad, though Berkshire Hathaway voting shares are deliberately kept expensive to stave off speculators.
This then get meta-player. A split suggests the company expects a price increase, and vice versa (reverse splits area thing too).