A midst the continuing tech stock sell-off, e-commerce leader Shopify (NYSE: SHOP) made headlines last week as the latest tech giant to announce a stock split. Apple and Tesla both completed stock splits in 2020, while semiconductor giant NVIDIA completed its own split last year. Even more recently, FAANG giants Alphabet and Amazon both announced stock splits, which are scheduled to occur this summer.
Per the terms of Shopify’s proposed 10-for-1 stock split, investors would receive an additional nine Class A or B shares for every one share they hold. However, Shopify CEO and founder Tobi Lütke would receive a special “founder share,” effectively giving him total voting power of 40% when combined with his existing Class B shares. Shareholders are set to vote on the stock split on June 7.
Should shareholders vote in favor of the proposal, investors could benefit from short-term momentum leading up to the split. However, it may be in the best interest of investors to hold throughout the short-term volatility in order to maximize gains. Let’s review what a stock split means and take a look at what splits have historically done for investors.
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