| Tuesday, November 4, 2008 - 10:56 pm |
Am I right in saying that a share split divides the share price and so brings the P/E crashing down, making the corps shares more attractive (or in this case bringing the P/E down well below the 70 mark I've read is the 'lose interest' point for investors), and so is this a good time to IPO? Thanks guys, the stock market challenges me.
| Thursday, November 6, 2008 - 09:59 am |
If a share split occurs, it means that the share price was considered too high. It produces more flexibility in trading volumes, and stability to the share price. Generally its an indicator that the company is performing well. I found out share mergers occur also in the game meaning, which is basically the opposite.
You can probably get away with IPOing after the share split, as there will probably be increased investor interest. But IPOing before a share split may prevent a share split from happening, the result on shares will be the same but the assets will go into the corporation not the shareholders (you), also it will cause a decrease of share ownership for all existing shareholders to facilitate these new shares. Its up to you. Creating new shares (IPO) gives you a smaller slice of the companies asset growth (your asset growth) unless you buy back all the shares just IPOed (which is basically you pumping cash into a public corp), share splits pass the expected asset growth fully onto the shareholders. Creating new shares through IPO (except the first IPO) aren't really a good idea unless the corporations is a bit low on cash.
| Thursday, November 6, 2008 - 10:03 am |
If you want to sell your shares a share split will be an easy time to sell them because there is an expected increase in share price. This also means your probably not getting the best price possible for your shares.
| Thursday, November 6, 2008 - 12:20 pm |
Thanks Angus, is there a rule of thumb share price that the game executes this share split at, so one could look out for it about to happen?
| Thursday, November 6, 2008 - 04:09 pm |
on a side note, the p/e doesn't change, just the share price. the p/e is affected on the profit and performance of the corporation.
| Saturday, November 8, 2008 - 04:46 pm |
oh right, I thought P/E was share Price / Earning, over a year. Thanx Travis. (CC, formerly known as ira)
| Saturday, November 8, 2008 - 09:32 pm |
If you had a share split, it means that you already have shares outstanding from a previous IPO. Of course, you may have bought them all back. Shares never split unless the company is on the share market.
| Sunday, November 9, 2008 - 11:17 am |
Unless the market value becomes very high apparently, then a IPO will occur automatically. If the corp ever offed shares, even if you own 100% of them, share splits will continue to occur.
And I couldn't tell you ira. There is probably a set price, but I haven't paid that much attention to notice.
| Monday, November 10, 2008 - 11:30 am |
Thanks guys, just trying to move a few corps to CEO, not as easy as it sounds for a greenhorn...