Under stock splits you'll still hold the same piece of the pie, but you'll have more individual pieces
Apple, Tesla have split their stock, but is anyone on the ASX doing it?
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Earlier this week, US tech giants Apple (NDQ:APPL) and Tesla (NDQ:TSLA) conducted stock splits, and they’re not alone.
A stock split involves increasing the company’s shares on issue. While leaving shareholders with a similar total value of shares they now have a higher number.
This is the first time that Tesla has split its shares, but the fifth time for Apple.
Splitting stocks makes shares more affordable for investors
Both companies justified their moves by stating they wanted shares to be more affordable or accessible to a broader range of investors.
Barclay Pearce Capital analyst Aran Anandakumar says that is the main reason companies undertake a share split.
“Companies usually split their stocks once they perceive the share price has grown ‘too expensive’ for mainstream investors,” he told Stockhead.
“The lower share price makes it more attractive to investors who can’t afford the higher share price, but still want to invest in the company.
“Think of Berkshire Hathaway, trading at around $320,000/share because it has never split. An average investor with $50,000 to invest wouldn’t even be able to buy a single share.”
Anandakumar said it could also be perceived as a sign of confidence that a company expects demand for its shares.
Has anyone on the ASX split stocks?
So far this year, no ASX-listed stocks have undertaken a share split, but over 30 have done the opposite — consolidated their shares.
Here’s a summary of the ASX stocks that have done stock consolidations in 2020:
Scroll or swipe to reveal table. Click headings to sort.
| Effective Date | Code | Company | Amount |
|---|---|---|---|
| 13/3/20 | PFT | Pure Foods Tasmania Ltd | 1 for 10 |
| 15/1/20 | TTB | Total Brain Ltd | 1 for 10 |
| 2/3/20 | AVR | Anteris Technologies Ltd | 1 for 100 |
| 4/3/20 | SUV | Suvo Strategic Minerals Ltd | 1 for 10 |
| 20/2/20 | OBJ | OBJ Ltd | 1 for 20 |
| 10/3/20 | TRL | Tanga Resources Ltd | 1 for 20 |
| 25/3/20 | EMR | Emerald Resources NL | 1 for 10 |
| 31/3/20 | BPH | BPH Energy Ltd | 1 for 10 |
| 7/4/20 | VOR | Vortiv Ltd | 1 for 20 |
| 2/4/20 | CTM | Centaurus Metals Ltd | 1 for 15 |
| 10/3/20 | VP7 | Velocity Property Group Ltd | 1 for 35 |
| 31/3/20 | SUP | Superior Lake Resources Ltd | 1 for 10 |
| 15/4/20 | CIO | Connected IO Ltd | 1 for 10 |
| 27/5/20 | GLV | Global Oil & Gas Ltd | 1 for 12 |
| 22/4/20 | MAR | Malachite Resources Ltd | 1 for 100 |
| 17/4/20 | LRK | Lark Distilling Co Ltd | 1 for 30 |
| 16/4/20 | STK | Strickland Metals Ltd | 1 for 10 |
| 23/6/20 | ORA | Orora Ltd | 4 for 5 |
| 1/6/20 | GTE | Great Western Exploration Ltd | 1 for 60 |
| 5/6/20 | WMX | Wiluna Mining Corp Ltd | 1 for 100 |
| 28/7/20 | WRM | White Rock Minerals Ltd | 1 for 100 |
| 16/6/20 | AWN | AWN Holdings Ltd | 1 for 4 |
| 14/7/20 | PRM | Prominence Energy Ltd | 1 for 10 |
| 22/6/20 | ENV | Enova Mining Ltd | 1 for 5 |
| 10/7/20 | ESS | Essential Metals Ltd | 1 for 10 |
| 19/8/20 | ZIP | ZipTel Ltd | 11 for 20 |
| 27/8/20 | ICGDA | Inca Minerals Ltd | 1 for 20 |
| 3/9/20 | RE1 | Resa Group Ltd | 19 for 20 |
| 21/9/20 | GCY | Gascoyne Resources Ltd | 1 for 20 |
| 26/8/20 | SERDA | Strategic Energy Resources Ltd | 1 for 10 |
| 8/10/20 | VEA | Viva Energy Group Ltd | 21 for 25 |
| 7/10/20 | BMG | BMG Resources Ltd | 1 for 10 |
| 31/8/20 | PNNDA | PepinNini Lithium Ltd | 1 for 100 |
Reasons for consolidating shares
The largest company to do a share consolidation is packaging stock Orora (ASX:ORA), which did a four-for-five consolidation on May. This was accompanied with a capital return.
The company said it was to reduce the number of shares on issue as well as to preserve the earnings per share and share price.
Many other companies have done bigger splits — a handful of stocks did a one for 100 consolidation.
One of the most recent was Alaska-focused explorer White Rock Minerals (ASX:WRM). Prior to undertaking a consolidation, the company had 1.9 billion shares on issue, but post consolidation and a capital raise it now has 72.6 million on issue.
Its rationale for the consolidation was similar to Orora’s, with White Rock telling shareholders it would provide “a capital structure that is more in line with White Rock’s size” and it “should also result in a share price level that is more attractive to a wider range of investors and could reduce share price volatility.”
Great Western Exploration (ASX:GTE) also recently consolidated its capital, swapping 60 shares for one.
