About Shopify’s 10-for-1 Stock Split
Shopify shareholders voted to approve a 10-for-1 stock split on Tuesday, June 7, 2022, after previously announcing plans for a split in April 2022. This is Shopify’s first stock split since the company went public in May 2015.
Stock splits issue additional shares to shareholders. With more shares issued, the price per share will reflect a lower amount. Importantly, while stock splits reduce the price per share, they do not intrinsically impact the stock’s value.
What does this mean for Shopify shareholders?
If you own 1 share of Shopify stock, following the 10-to-1 stock split you gain an additional 9 shares at a new share price that is lower than the previous price per share. As an investor, following the split, you’d own 10 total shares versus 1, with the total value of your shares remaining unchanged.
For example: Say you own 1 share of Company X at a current price per share of $1,000. Following a 10-to-1 stock split, you would own 10 shares of Company X at a price per share of $100. The total value reflects the same amount you started with, but you now own more total shares.
If you own a fraction of a share, the same math applies. For example, if you own 0.5 of one share of stock (priced at $250), you will now own 5 total shares priced at $25 per share, with the same total value being $125.
The split will impact Shopify shareholders of record as of June 22.
Please note that you may notice temporary inconsistencies in your portfolio charts, SHOP position value, and average price paid following the split on June 29.
Why do companies split their stock?
Stock splits are designed to make the cost per share for investors more affordable by increasing the number of shares and lowering the price per share. Stock splits had a greater impact on retail investor affordability prior to the advent of fractional shares because they made the price per one share of stock for expensive stocks more accessible for the average investor.
You can learn more about stock splits here.
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