This is going to be one of the most well-known stock splits since Amazon and Alphabet did it in 2022.
Big-box store Walmart has said that it will soon split its stock. The company will be one of the most well-known to split its stock since Amazon and Alphabet did it in 2022. But why is Walmart sharing its stock? What does that mean for people who own stock? Read this to learn more.
WHAT IS A SPLIT STOCK?
To put it simply, a Walmart stock split is splitting because the company wants to make more shares out of current shares by lowering the price of each share. This makes the shares cheaper to buy.
Ratios are used to split stocks. For example, a 2-for-1 split means that each current share is cut in half, making two shares. To use an example, if you had ten shares before the split and each one was worth $10, you would have 20 shares after the split, but each one would only be worth $5.
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WHAT DID WALMART DO WITH ALL OF ITS STOCK?
Walmart announced a 3-for-1 stock split for its common stock (ticker: WMT). We will have three times as many WMT shares after the split as there are now.
People who own stock will get three times as many shares after the split, right?
Yes. Let’s say you currently own 1,000 shares of WMT. Your WMT stock will be worth 3,000 shares after the 3-for-1 split.
DOES THAT MEAN THAT MY WMT SHARES WILL BE WORTH THREE TIMES MORE?
Nope. Your WMT shares will still be worth the same amount as they were before the split. This is because the value of each share is cut in half by the same amount that the stock is split by.
Each WMT share will be worth only a third of what it was worth before the split. But the value of all of your WMT shares will stay the same, both before and after the split.
DOES WALMART’S STOCK SPLIT MAKE IT A BETTER VENTURE?
No. In the same way that an investor’s shares will always be worth the same amount, Walmart’s market cap will always be the same.
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WHY DO YOU NEED TO SPLIT THE STOCK THEN?
A company usually splits its stock when the price gets so high that regular people don’t want to buy even one share. Like, when Amazon did a 20-for-1 stock split in 2022, the price of each share was almost $3,000. To put it another way, a regular person with $2,000 could not buy a single share of AMZN before the split.
But WMT shares are still trading around $167 at the time of this writing, even though they are close to an all-time high. That means that a lot of buyers can still buy a share. Walmart says that one of the main reasons it’s splitting its stock has nothing to do with small buyers. It’s about people who work at Walmart.
STOCK SPLIT: WHAT DOES IT MEAN FOR WALMART EMPLOYEES?
Walmart said in a statement that one of the reasons for the split is that the company wants to make individual shares cheaper so that workers can buy them more easily. Workers can buy shares by having money taken out of their paychecks automatically. (Many big companies offer plans like this for their employees to buy company stock.)
Walmart CEO Doug McMillon said, “Sam Walton thought it was important to keep our share price in a range where all of our employees could buy whole shares instead of fractions.” We thought it was a good idea to split the stock to allow our employees to take part in the years to come because of our growth and plans for the future.
WHEN DO WALMART SHARES GET SPLIT?
Before the market ends on Friday, February 23, 2024, WMT shares will be split three ways for one person who owned shares on Thursday, February 22, 2024. On Monday, February 26, 2024, WMT shares will start selling at the price that takes into account the split.