In theory, a stock split doesn’t change company fundamentals, but the move will attract retail investors who are limited to low-value stocks, says Jim Cramer of CNBC said Wednesday on its “Mad Money” show.
New ‘group of investors’: Apple Inc. (NASDAQ: AAPL) CEO Tim Cook and Tesla Inc (NASDAQ: TSLA) CEO Elon Musk got it right when they announced their respective stock split, Cramer said.
The host of CNBC said “price tags matter” to the younger generation and companies needing a young demographic of investors to be considered shareholders.
“We know what happens after the breakup,”; he said. “This new group of investors who love low dollar stocks will start buying and holding these best names rather than adorable penny stocks.”
Mega-cap companies are “ignoring” small investors, and Cramer says it’s a mistake. After all, retail investors are typically “more stable shareholders” than hedge funds known for offering “no loyalty,” he said.
10 shares to split: Cramer’s list of 10 stocks that should be broken down to attract a larger number of investors includes:
E-commerce and retail giant Amazon.com, Inc. (NASDAQ: AMZN).
Google and its parent company YouTube Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL).
Conventional fast food chain Chipotle Mexican Grill, Inc. (NYSE: CMG).
Video streaming company Netflix Inc (NASDAQ: NFLX).
Chip manufacturer Nvidia Corporation (NASDAQ: NVDA).
Play rapidly growing cloud Adobe Inc (NASDAQ: ADBE).
Businessman Costco Wholesale Joint Stock Company (NASDAQ: COST).
Retailer home improvement Home Depot Inc (NYSE: HD).
Social media giant Facebook, Inc. (NASDAQ: FB).
Tech giant and cloud company Microsoft Corporation (NASDAQ: MSFT).
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