Do Stock Splits ACTUALLY Boost Returns? What the Numbers Say

00:00 - Intro
01:36 - How Stock Splits Work
02:30 - Why People Think They Boost Returns
03:40 - Arguments Against the Idea
04:24 - My Analysis
05:52 - The Results (Effective Date)
07:31 - The Outliers
08:55 - The Results (Announcement Date)
10:15 - Large Cap Results
11:59 - Takeaways
13:03 - Sponsor

Some have been speculating that upcoming stock splits for big companies will be a source of outsized returns - is this reasonable? I did a small experiment to look into it.

DISCLAIMER:
This channel is for education purposes only and does not constitute financial advice - Richard is not responsible for investment actions taken by viewers. Please seek out a registered advisor if you require assistance (while Richard is a registered portfolio manager at WDS Investment Management, he does not provide advice through The Plain Bagel, which is not affiliated with his employer).

[GT-tjqg]

Each time I'm about to say "but he hasn't taken account of ___" he then goes and takes account of it lol. Great YouTuber.

[incremental_failure]

It also has to do with dip buyers stepping in to buy, automated ones with bad data correction algos.

[IzChua]

I think theres one factor you missed out when it comes to stock splits which is hype. When people(retail) think of investing, they are thinking of names like Apple, Tesla, Amazon and Google. The brand reputation itself is a leading factor for the price action. Its very hard to quantify hype so its also difficult to conduct any analytical studies on it. Overall its still a very good video 👍

[unkreativnet]

Very good and very important video. Thank you for your work!

[ec]

No but more people could afford $100 instead of $2000 a stock so more demand. My brokers do not allow to buy fraction of Googl.

Are all split stocks you analyze are over $2000. If some are just $100 or much less than $2000, I am afraid it is not apple to apple comparison since $100 stock before split is already very affordable.

I believe Googl will go up after split even split itself will not increase the intrinsic value.

[bestgirlie]

What's needed? Liquid cash. Everyone only has credit. If you have stacks of cash, you can capitalize on everyone's credit. A recession as bad it can be, provides good buying opportunities in the markets if you’re careful and it can also create volatility giving great short time buy and sell opportunities too. This is not financial advise but get buying.

[jasonluong]

At 10:19, just before the graphic fades away, it shows NVIDIA split 4 for 1 in May 2021. Only 3 years later, NVIDIA is about to do a 10:1 split because at its current price of over $1000 a share, it is considered too prohibitive to attract new investors. Before the split, its price was $600. So if NVIDIA had not done the 4:1 split, its current price "should" be $4, 000. It should be, and not would be, because the 4:1 split itself may have contributed to the explosive growth of this company's stock price. So within 3 years, NVIDIA went from $600 to $4000. Astounding.

[AlexanderTheGoodEnough]

Lead to better performance? No by itself. A result of good performance? More likely. If good performance continues, then the split likely had nothing to do with it...unless you're TSLA.

[thinkingonyx]

Google had a stock split in 2022 and has been doing quite well since then, their share price was a whopping $2, 000 before the 1-for-20 split.

[davidpoole]

I think that it would mainly depend on the company.

[behrensf]

wait a minute? do stock splits improve company performance, or do companies with good performance tend to split their stock?

[finnowsley]

How can they underperform the market by around 12% for a year if their return for a year is around 12%? Doesn't that imply the market return was 24% a year on average? What am I missing

[Xairos]

Great video. I'm really curious if the low stock price really encourages retail investors to buy in

[jensschreiner]

I really like your videos, but " from 2020 - 2022..." is really not a good set of data.

The past 15 years money has been thrown at the markets. Comparison to a pumped SP500 is kind of lame.

Let's see how stock splits perform in a more difficult decade.

[cosmicmauve]

From my experience they usually go down for a bit. CIBC is going to split, I'm a long term holder, I'll do fine.

[InvestorCenter]

Stock splits create no tangible value. It’s crazy how people “invest” in a company just because of a pending stock split

[kurtmiller]

What is the benefit to splitting a stock in the first place? If there is no impact to performance, why do it at all? Honest question.

[simon]

Thanks for the hard work, will there be a episode on fixed income market? Investment grade, high yield and government bond?

[abdlldajani]

Great work and you can certainly conclude that they don't have much of an impact now. What about for long term investors focusing on 5-10 year horizons? Also right now we're in a bear market or at least a major correction.

[deltabeta]

Do stock Bonuses dilute the price of the stock?