Stock Splits ... and then what?
Motivated by a question raised on Morningstar

I was wondering what'd happen to a stock price when it splits and whether the price would go up or down or ...

>If it split 2-for-1 I'd say the price gets cut in half. Am I right?
No, I don't mean that. I mean, would you expect the return to be larger or smaller or maybe even random.

>I'd say random. Am I right?
I have no idea, but there seems to be some who expect the return to be larger after a stock split.

>And you decided to check it out, right?
Yes ... and I got these examples where the right chart is a closeup from 20 days before to 20 days after the split:


Valero Energy

RPC Inc.

Napco Security Systems


>I recognize the first guy, but what are the others?
I just searched for stocks that split and found a few ... just to see what happened at the time of the stock split.
>And your conclusion is ... what?
I have no idea. I'm still thinking ...
>If I look at the left chart I'd think that the stock goes up ... eventually.
And if I look at the right chart it seems to go down, in the short term.
>But don't they announce the split, weeks before it happens?
Yes, I guess. Sometimes a month before, sometimes several months.
>And wouldn't that affect the stock price ... at the time they announce the split?
I have no idea.
>Is that all you can say?
I have no idea, but Shell Canada had a stock split in June, 2005:

Shell Canada

But when they announced the split ... that was in March, 2005:
More recently, Whole Foods announced a split:
Then there's Aqua America
and StanCorp Financial

>So the price drops when the announcement is made ... sometimes, right?