Today, Shopify (NYSE:SHOP) is starting the week on an important announcement: the Canadian e-commerce platform is planning a 10-for-1 stock split, following the example of Amazon (NASDAQ:AMZN), Tesla (NASDAQ:TSLA) and others. SHOP stock first reacted well to the news, with shares rising slightly in pre-market trading. Now, the stock is trading relatively flat, in the green less than 1% as of this writing. The stock split also raises plenty of questions for investors.
Of course, it makes sense for Shopify to opt for a stock split. For one, splitting shares makes them more accessible to small-scale investors. Splits can also boost stocks if the conditions are right; Wall Street saw the Tesla stock split lead to a doubling in price. And, while Shopify did emerge as a clear winner at the beginning of the pandemic, it has begun to struggle as the momentum fades. The stock is up 9% for the past one month but down more than 55% for the past six. On TipRanks, it’s rated as a Moderate Buy, with analysts almost perfectly divided between Buy and Hold ratings.
Shopify clearly needs a plan of action if it’s going to regain momentum in 2022. So, a stock split may be exactly what it needs to keep growing. This split could open SHOP up to new investors. If it’s approved, shareholders will also be issued nine additional shares for each share they own.
Let’s take a closer look at the details of the Shopify stock split and what investors can expect as plans move forward.
When Is the Shopify Stock Split?
According to reports, the Shopify stock split is scheduled for late June 2022. But there’s additional information investors should know.
As Reuters reports, everyone who holds SHOP stock on June 22 will receive their additional shares on June 28. However, the stock split is subject to shareholder approval. According to a statement from the company, the approval meeting will be on June 7. Investors should be watching the stock carefully as this key date nears. Shares will likely rise in anticipation, particularly if sentiment toward the split is positive moving forward.
Stock splits have become increasingly popular throughout the past year because they’ve proven to be effective. Investors have already seen them work for Amazon and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL). Most recently, Tesla and GameStop (NYSE:GME) followed suit. News of a split can generate quick momentum as investors load up on shares before the split date. Now, there’s not much reason to expect any different for Shopify.
While the SHOP stock split is still subject to a vote, it’s highly unlikely the company won’t receive shareholder approval. Investors know that splitting a stock ultimately helps boost shares. Plus, Shopify is an innovative company with plenty of utility and room to grow. When momentum stalls for a company trading at high levels, a stock split simply makes a lot of sense.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
