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A comment on Twitter board adopts poison pill after Musk’s $43B bid to buy company. Parent comment

Re:Twitter board adopts poison pill after Musk’s $43B bid to... by and-not-drew on Friday April 15, 2022 @04:18PM (#31045297)
> The market has been so weird recently that stock splits - which according to previous theoretical belief do not create shareholder value - have in fact increased the share price for extended periods

You're right that theoretically, they shouldn't create value, but I think even back to the 80s and 90s it's been shown that companies that go through a split tend to out perform the market for years after the split. The main reason isn't that the split creates value, but rather that companies who go though a stock split are usually successful and already on a trajectory to beat the market, split or not.

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Re:Twitter board adopts poison pill after Musk’s $43B bid to... by JumpCrisscross on Friday April 15, 2022 @07:21PM (#31047166)
> even back to the 80s and 90s it's been shown that companies that go through a split tend to out perform the market for years after the split

Going back to the late 60s [1].

[1] https://www.researchgate.net/profile/Hemang-Desai-2/publicat...

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Re:Twitter board adopts poison pill after Musk’s $43B bid to... by hackernewds on Friday April 15, 2022 @04:52PM (#31045685)
So that selection bias seems to project that buying before a share split is actually not an educated+good decision
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Re:Twitter board adopts poison pill after Musk’s $43B bid to... by and-not-drew on Friday April 15, 2022 @05:12PM (#31045904)
I think it still is. I'm going to try to find a source, but I saw an analysis where they measured from a year before the split, the day the split was announced, and the day the split was executed all until one year after the split was executed and the returns on all of them beat the market as a whole.

That being said, holding before the announcement performed the best.

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Re:Twitter board adopts poison pill after Musk’s $43B bid to... by Majromax on Friday April 15, 2022 @05:52PM (#31046344)
> I'm going to try to find a source, but I saw an analysis where they measured from a year before the split,

There's a bit of time travel / survivor bias with this one. A company that has not beaten the market is much less likely to split its stock. In other words, if I know nothing other than that a company is splitting its stock, I can reasonably guess that it's shown good returns in recent history.

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Re:Twitter board adopts poison pill after Musk’s $43B bid to... by and-not-drew on Friday April 15, 2022 @06:53PM (#31046935)
Yeah, that was their whole point. Stock splits don't cause better returns, but the stocks with the best returns are more likely to split.
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