Should you buy expensive stocks?
A new paper suggests the answer is ‘yes’
ON JUN 7, each share in Nvidia became many. In one sense, such stock splits ought not to matter much: they merely lower the share price, usually returning it to somewhere near US$100, in order to make small trades easier.
Yet, for the company and its long-time backers, this administrative exercise is cause to pop the champagne. For a split to be necessary in the first place, the share price must have multiplied, commonly by two or three, prompting each share to be divided by the same factor. Each Nvidia share, however, became 10.
Two years ago, both Alphabet and Amazon split each of their shares into 20. Investors in big tech have had plenty of opportunities to let the corks fly.
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