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PANW Stock Falls After Palo Alto Stock Split. What to Know.

  • Palo Alto Networks (PANW) stock is down despite a 3-for-1 stock split in PANW stock.
  • The company joins several other well-known names in tech in splitting its stock, hoping to spur increased demand for its shares.
  • Shares are down “just” 15.5% from the highs and just 2.6% so far on the year, as business continues to boom.
PANW stock - PANW Stock Falls After Palo Alto Stock Split. What to Know.

Source: Sundry Photography / Shutterstock.com

Shares of Palo Alto Networks (NASDAQ:PANW) stock are in the spotlight on Wednesday. However, bulls have to be a bit disappointed with today’s action. PANW stock is down about 1% on the day at the time of writing, even as the overall market is higher on the session.

All four major U.S. indices are trading higher on Wednesday after an absolutely brutal session on Tuesday. U.S. equities had their worst day since June 2020, although Palo Alto Networks stock did pretty well, relatively speaking. Shares fell “just” 3.4% — better than all the major U.S. indices — ahead of its 3-for-1 stock split.

That stock split went into effect today, which adds even more disappointment to the stock’s reaction. Investors were hoping that PANW stock would be higher on the day with the rebound in the stock market and Palo Alto Networks’ stock split.

That said, we shouldn’t extrapolate too much from one day of price action.

That’s particularly true with a stock split, where there’s no actual value added to the company. In this case, they cut the share price by one-third and tripled the number of shares available. At the end of the day, it’s simple arithmetic. 100 shares available at $60 apiece is worth $6,000. 300 shares at $20 apiece is also worth $6,000.

Is PANW Stock a Buy?

While a stock split doesn’t change the value of the company, it can help the stock price. Studies have shown it can be beneficial over a one-year span. According to Bank of America: “Stocks that have split gained on average 25% over the next 12 months compared with a gain of 9% for the benchmark index.”

So PANW stock has that working in its favor, as it joins Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), Amazon (NASDAQ:AMZN) and Tesla (NASDAQ:TSLA) as recent big-name tech companies to split their stock.

Also working in Palo Alto Networks’ favor? Business is booming. When the company reported earnings on Aug. 22, the company beat on earnings and revenue estimates. Better yet, guidance topped expectations as well. All year long, Palo Alto Networks has been telling a strong story, and management continues to deliver.

Currently, PANW stock is down “just” 15.5% from its all-time highs and is one of the few tech stocks to make new highs in Q2 2022. While it’s possible that a selloff in the overall market weighs on this stock, clearly it’s a high-quality stock.

On the date of publication, Bret Kenwell did not have (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.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.

Article printed from InvestorPlace Media, https://investorplace.com/2022/09/panw-stock-falls-after-palo-alto-stock-split-what-to-know/.

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