A stock split will in theory not change fundamental companies, but the move will attract retail investors who were otherwise limited to low-dollar stocks, CNBC’s Jim Cramer said on Wednesday on his show “Mad Money.”
New ‘investor cohort’: Apple Inc. (NASDAQ: AAPL) CEO Tim Cook en Tesla Inc (NASDAQ: TSLA) CEO Elon Musk got it right when she announced her respective stock splits, Cramer said.
The stock “price tag is important” with the younger generation, and companies should consider the young demographic investor group as shareholders, the CNBC host said.
“We know what happens after the split,” he said. “This new cohort of investors, those who own low-dollar stocks, will start buying and keeping these best-of-breed names instead of the darned penny stocks.”
Mega-cap companies “ignore” the small investor, and Cramer said this is a mistake. After all, retail investors are often “more stable shareholders” compared to hedge funds known for offering “no loyalty,” he said.
10 forms to split: Cramer’s list of 10 stocks that need to be split to attract a broader investor base includes:
E-commerce and retail giant Amazon.com, Inc. (NASDAQ: AMZN).
- Parent company Google and YouTube Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL)
- Casual fast-food chain Chipotle Mexican Grill, Inc. (NYSE: CMG)
- Streaming video company Netflix Inc (NASDAQ: NFLX)
- Chipmaker Nvidia Corporation (NASDAQ: NVDA)
- Fast-growing cloud game Adobe Inc (NASDAQ: ADBE)
- Wholesaler Costco Wholesale Corporation (NASDAQ: COST)
- Home Improvement Store 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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Musk always provided ‘The Little Guy’ and Tesla stock split shows that: Higgins of WSJ
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