As stock splits wane, more may follow Google to $1,000

Fri Oct 18, 2013 6:57pm EDT
 
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By Julia Edwards

NEW YORK (Reuters) - With its surge on Friday, Google Inc became the latest member, though not likely the last, of a tiny fraternity of companies that boast $1,000 share prices.

In a market where stock splits have become rarer, there may be more of this to come than just the two stocks with four-digit stock prices in the Standard & Poor's 500 index - Google and Priceline.com, which hit $1,000 earlier this year.

Historically, once share prices got too high - even around $125 a share - companies split shares to make them more accessible to Main Street investors. But splits have become few and far between, and big numbers are more the norm for familiar names like Apple Inc, Chipotle Mexican Grill Inc, Netflix Inc and Visa Inc.

Stock splits peaked in 1986 and 1987, when there were 114 and 111 splits, respectively, and they surged again in the go-go days of the dot-com bubble, with 102 splits in 1997, back when retail investors hungrily chased the tech boom, according to S&P Dow Jones Indices.

That frenzy ended after the bubble burst, and has diminished further since the last peak in 2007. The trend now, according to Richard Peterson, director of S&P Capital IQ Global Markets Intelligence group, is for companies to let prices rise as retail and individual investors are not as likely to balk as they once were.

"Many retail investors have migrated off to exchange-traded funds or mutual funds. And many of the trading companies don't want a split because if you split the shares you inherently increase the trading costs," said Peterson.

Peterson added that if the trend continues, the market could see more companies join Priceline and Google above the $1,000 a share mark.

"Maybe next year or the year after we could see double digits reach the four digit," he said.   Continued...

 
A Google logo is seen at the garage where the company was founded on Google's 15th anniversary in Menlo Park, California September 26, 2013. REUTERS/Stephen Lam