IBM split its stock twice between 1995 and 2008. The first of these splits was in May 1997, and the most recent move took place in May 1999. The company has had 15 stock splits in total during its history.Continue Reading
The two share-price adjustments that took place between 1995 and 2008 were both two-for-one stock splits. This is the most common form of stock split and is when a stock halves in value and doubles in quantity. A stock that is originally priced at $100, for example, is adjusted so the shareholder now has two shares, each valued at $50 a share. The market value of the shareholder’s position remains unchanged.
Prior to 1997, IBM split the stock on 13 other occasions, with the first of these occurring in 1926 and the last in 1979.
The company’s rationale for the exercise back in 1999 was that it believed splitting the stock would result in a market price that should be more attractive to a broader spectrum of investors, particularly retail investors. This was at a time when information technology stocks were particularly popular with individual investors and took place prior to the bursting of the so-called “dotcom bubble” within the sector.
Because a split makes a stock more attractive and affordable to smaller investors, the stock market tends to be supportive of such actions. Existing shareholders also generally like stock splits because they end up holding more shares.Learn more about Investing