I have been thinking about this question recently, i hope someone can help me clear this up. When a stock “splits” i.e. its share price halves and quantity doubles, how does it appear in the stock market the following day, is the price quoted as half of original value, with a drop of 50% quoted, or is there a different system?
RENALDO
Comments
When a stock splits the value of the shares does not change a bit. You just have double the shares at halve the price. The market will list it at the split price.
No, the stock with show an open price of 50% of the last day of trading but not as a 50% lose. The up/down is adjusted to be exactly the same also.
It SHOULD show up with a quote of approximately half of the previous day’s close and the daily change amount SHOULD be shown based on half of the pre-split closing price.
So for example if the stock closes at $60 and splits 2-for-1, then the next day, it should show “$30.00, unchanged” or “$30.05, up $.05″ or something like that.
HOWEVER, from experience it seems that many quote websites do not automatically adjust for the split, so sometimes on some sites you will see “$30,05, down $29.95″ for a few hours or maybe even all day until someone goes in and (apparently manually) updates the website’s system to know about the split.
It seems to me that there should be something in the quote feed that tells the systems about the split, but since I’ve often seen sites not appearing to know about the split for awhile, there apparently isn’t.
The answers you’ve received are correct (so far).
So let a me add one more thing;
Stock Splits Mean Nothing (don’t waste your time with them).
On yahoo it will show up like the stock lost 50% on the ex date for a day. I wasn’t watching my mail, or reading the news, I checked a quote and nearly had a freaking heart attack! Yahoo finance fixes it usually a couple days late…
They adjust the old #’s from before the split so you can see the growth of value, or compare time periods. Hope that helps.
