As many of you know, $GOOG — Google Inc. has recently announced that they will be undergoing a 20:1 stock split. In order to understand more about how this split can affect GOOG, we can outline some competitors, and examine their previous splits (to see how they performed between the news and the split).
AAPL Split:
Apple’s most recent split took place on August 28 th, 2020, which they announced on July 30th. Between the opening of the market on July 31 stand the first trading day after the split August 29 th2020, Apple rose by over 34%. During this time the market (S&P 500 was up a little over 7%)
NVDA Split:
Nvidia announced their most recent stock split on May 21 st, and underwent their split on July 20 th. Between the opening of the market on May 22 nd, and the opening of the market on split day (July 20), Nvidia’s stock price increased by over 25%. During this time the market went up by a little over 8%.
TSLA Split:
Tesla announced their split on August 11th, which took place on August 28 th. Between the open on August 12 thand the open on August 28 th, TSLA shares rose by over 52%. During this time the market went up by a little over 4%.
Conclusion:
Over the past couple of years, there have only been 3 major US tech companies to undergo a stock split, and all of their splits have either been 4:1 or 5:1, but nothing similar to a 20:1 split. Furthermore, all of the splits mentioned above have split within 2 months of their announcement, however Google is waiting until July 16 thto make their split (over 5 months). If we look at the performance of the above stocks after their split, we can see that the shorter the timeframe between the announcement and the split, the higher the return was. Additionally, we can see that NVDA took the longest, and experienced a large sell off weeks before their split.
All 3 of these stock splits experienced massive growth between their announcement and their actual stock split. The returns on these splits have ranged from 25–52%. Applying this logic to GOOG stock, we can estimate that their price will range between $3,428-$4,168. Both of these estimates are near or above their current 1Y price forecast of $3,506. However, my personal prediction is that GOOG will reach $3,290 before their stock split, which would represent a 15% increase from the current stock price of $2,860. I think that GOOG will underperform the other splits due to the long time between their announcement and their actual split.
Originally published at https://utradea.com.
