Shopify Stock Split: What should investors do?

Last updated:
shopify stock split

Shopify Stock Split Introduction

Shopify Inc. is a Canadian multinational e-commerce company headquartered in Ottawa, Ontario. Recently it announced a stock split of 10:1 in the latest annual shareholder meeting. 

What is a stock split?

  • When a company divides its existing shares into multiple new shares, it is known as a stock split.
  • Firms usually split their stocks when the stock price becomes too expensive and the company wants to make it more affordable to investors.
  • A stock split only affects the share price and not the value of the company.
  • Various companies have split their stocks in the past including Amazon and Apple.

Shopify Splits Stock 10:1

  • Shopify split its stocks in a 10:1 ratio which means that its share price shall be divided by 10. 
  • This further means that the stock would reduce from $350 (on the day of announcement) to approximately $35. Currently, Shopify's stock price is trading at $33.05
  • The stock split might help Shopify's stock price to revive after it had fallen by over 80% from its previous peak.
  • Google plans for a 20:1 split in July and Tesla still awaits approval on its 3:1 stock split

What should investors do?

  • Investors will end up with 9 additional shares for every one share they owned prior to the split.
  • As we said earlier, the stock split will not change any business prospects for the future or affect earnings.
  • With this, a higher number of retail investors can purchase Shopify shares and there shall be an increase in the number of shares available.
  • Shopify stock had fallen by over 5.64% after the stock split announcement.

Analysts Recommendation

On the whole, Analysts have maintained their position to “buy”. Out of 29 analysts rating the stock, 11 have voted for “buy” while 7 have rated “strong buy”. 10 analysts have given a “hold” rating, while just 1 has given an “underperform”. Analysts are of the opinion that Shopify can benefit from the ongoing digital transformation on the lines of merchant solutions and subscription plans.

  • Is a split in stock good?

  • Why did Shopify split its shares?

  • Do stocks go up after a split?