All systems are go for the Shopify (NYSE:SHOP) stock split. The e-commerce company recently received approval from shareholders for its 10-for-1 split slated for June 28. Now, SHOP is following names like Amazon (NASDAQ:AMZN) and Kinetik Holdings (NASDAQ:KNTK), which have also opted for stock splits this month.
Shopify has struggled lately amid broad market forces. But it has also struggled to adapt to the changing economic landscape, as Wells Fargo analysts recently opined. Shares rose earlier this week on anticipation for the SHOP stock split, but today they’re back in the red by nearly 4%.
Will the Shopify stock split boost momentum and drive up shares? It certainly could, given what we’ve seen from other splits.
Let’s take a look at what this latest move means for SHOP stock.
What’s Happening with SHOP Stock?
As InvestorPlace contributor Chris MacDonald reports, June 29 will be the first day SHOP trades at its split-adjusted price. That price will be much lower than today’s price tag. However, investors shouldn’t worry; the nature of the split means that every one share owned will be split into 10 shares. So, the value of a given investor’s holdings will remain unchanged. That is, unless more investors pile in after the split and drive up shares.
If luck holds, new investors may jump into SHOP stock at the lower post-split price. Of course, a few days after its own stock split, AMZN stock is still down. But plenty of experts maintain that’s just an opportunity to buy the dip in Amazon.
Experts remain mixed on SHOP stock. InvestorPlace‘s Louis Navellier has advised investors to look elsewhere. But contributor Nicolas Chahine is much more bullish. Chahine believes SHOP may be due for a turnaround, with Shopify more focused on long-term growth than short-term returns.
What It Means
The Shopify stock split has generated some controversy since being announced. As part of the move, CEO Tobias Lütke is receiving a founder share which lets him retain 40% of voting power.
That said, the stock split could definitely generate some clear benefits for investors. Because of that, SHOP stock will likely rise as the split date draws near.
SHOP stock may require investors to play the long game, but it’s certainly a game they can win with patience.
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.
