# Let's talk about Walmart stock splitting **URL:** \ **Category:** In My Humble Opinion\ **Created:** [February 2, 2024, 6:26pm UTC](https://boards.straightdope.com/t/lets-talk-about-walmart-stock-splitting/997040 "2024-02-02T18:26:06Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![Southern\_Yankee](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/southern_yankee/32/2800_2.png) [@Southern\_Yankee](https://boards.straightdope.com/u/Southern_Yankee)\ **Post date:** [February 2, 2024, 6:26pm UTC](https://boards.straightdope.com/t/lets-talk-about-walmart-stock-splitting/997040/1 "2024-02-02T18:26:06Z")
Walmart has announced a 3:1 stock split after closing on 2/23. I have owned WMT stock for a few years. I bought at $148 and today it’s at $168. When the split happens I will have triple the number of shares, but the share value will be reduced by a lot. The net value of my investment won’t change much. Now, of course, if the value rises over time (I’m in no rush) I will have more shares to appreciate. On the other hand, I could sell today, make about $20/share and hope the stock goes down before the 23rd and rebuy it. Is that a bad idea? Of course the price could rise before I rebought. It’s currently at it’s highest price over the last year though. It has been as low as $153 within the last few months so it’s a bit volatile. ---
**Author:** ![Snarky\_Kong](https://avatars.discourse-cdn.com/v4/letter/s/a183cd/32.png) [@Snarky\_Kong](https://boards.straightdope.com/u/Snarky_Kong)\ **Post date:** [February 2, 2024, 6:29pm UTC](https://boards.straightdope.com/t/lets-talk-about-walmart-stock-splitting/997040/2 "2024-02-02T18:29:22Z")
This isn’t a factual question, but yes, trying to time the market is a bad idea. ---
**Author:** ![Southern\_Yankee](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/southern_yankee/32/2800_2.png) [@Southern\_Yankee](https://boards.straightdope.com/u/Southern_Yankee)\ **Post date:** [February 2, 2024, 6:30pm UTC](https://boards.straightdope.com/t/lets-talk-about-walmart-stock-splitting/997040/3 "2024-02-02T18:30:43Z")
You’re right. I started asking a general about stock splits and changed course mid-post. Admins, please move to the Opinions forum. Nevermind, I was able to move it. ---
**Author:** ![Whack-a-Mole](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/whack-a-mole/32/141_2.png) [@Whack-a-Mole](https://boards.straightdope.com/u/Whack-a-Mole)\ **Post date:** [February 2, 2024, 6:35pm UTC](https://boards.straightdope.com/t/lets-talk-about-walmart-stock-splitting/997040/4 "2024-02-02T18:35:04Z")
> [@Southern\_Yankee](#): > > Now, of course, if the value rises over time (I’m in no rush) I will have more shares to appreciate. Eh… A stock split does not make you any money by itself. If you own one share worth $99 and there is a 3:1 split you now have three shares worth $33. You have not made money. The benefit is, with each share costing less, more people may be willing to buy the stock since each share is affordable (so you will make money). That said, some stocks go the other way. One share of Berkshire Hathaway Class-A stock is currently $587,270/share. ---
**Author:** ![Southern\_Yankee](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/southern_yankee/32/2800_2.png) [@Southern\_Yankee](https://boards.straightdope.com/u/Southern_Yankee)\ **Post date:** [February 2, 2024, 6:38pm UTC](https://boards.straightdope.com/t/lets-talk-about-walmart-stock-splitting/997040/5 "2024-02-02T18:38:23Z")
I understand (I noted that initially.) I have been thinking about selling since it’s at it’s highest point in a long time anyway, Just trying to think through the options with the split coming. I agree with **Snarky\_Kong** that it’s not a great idea to try and predict the market though. ---
**Author:** ![RitterSport](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/rittersport/32/6326_2.png) [@RitterSport](https://boards.straightdope.com/u/RitterSport)\ **Post date:** [February 2, 2024, 6:42pm UTC](https://boards.straightdope.com/t/lets-talk-about-walmart-stock-splitting/997040/6 "2024-02-02T18:42:36Z")
A split doesn’t change your economics at all. I don’t think there’s any evidence that a split predicts that the future price will be higher or lower – if it always tended to move in one direction or another, the market would adjust as soon as the split was announced. All that says that the stock splitting is irrelevant to whether you should hold, sell, or buy more. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [February 2, 2024, 6:49pm UTC](https://boards.straightdope.com/t/lets-talk-about-walmart-stock-splitting/997040/7 "2024-02-02T18:49:52Z")
For the most part, I believe in the buy-and-hold theory, so if I were you, I’d hang onto the Walmart stock. ---
**Author:** ![leahcim](https://avatars.discourse-cdn.com/v4/letter/l/b4bc9f/32.png) [@leahcim](https://boards.straightdope.com/u/leahcim)\ **Post date:** [February 2, 2024, 6:54pm UTC](https://boards.straightdope.com/t/lets-talk-about-walmart-stock-splitting/997040/8 "2024-02-02T18:54:22Z")
> [@Whack-a-Mole](#): > > The benefit is, with each share costing less, more people may be willing to buy the stock since each share is affordable (so you will make money). I owned some BRK.B when it did a 50:1 stock split from about $3500, and it was talked about how the overall price might get a boost from people who’d like to own some, but didn’t have $3500 to allocate to a single share, who could now buy. As I recall it wasn’t clear how that actually turned out. The stock went up post split, but the overall market was rising as well, so any split-effect was non-obvious. ---
**Author:** ![Whack-a-Mole](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/whack-a-mole/32/141_2.png) [@Whack-a-Mole](https://boards.straightdope.com/u/Whack-a-Mole)\ **Post date:** [February 2, 2024, 6:55pm UTC](https://boards.straightdope.com/t/lets-talk-about-walmart-stock-splitting/997040/9 "2024-02-02T18:55:43Z")
At the least it should make you more liquid with a lower share price which, I think, has some value. I suppose that also means the stock could be more volatile which may not be desirable (although some make money on volatility so…). ---
**Author:** ![Dag\_Otto](https://avatars.discourse-cdn.com/v4/letter/d/439d5e/32.png) [@Dag\_Otto](https://boards.straightdope.com/u/Dag_Otto)\ **Post date:** [February 2, 2024, 7:07pm UTC](https://boards.straightdope.com/t/lets-talk-about-walmart-stock-splitting/997040/10 "2024-02-02T19:07:27Z")
Note that selling will create a tax liability, so selling a share at $168 will net $165 (assuming a 15% long term capital gains tax of $3 on the $20 gain). So you won’t be able to buy back quite the same amount of split adjusted shares, though you would reset the cost basis. It might make sense if you could take advantage of the 0% LTCG rate, but the best course of action is usually not to let the tax tail wag the investment dog. ---
**Author:** ![Measure\_for\_Measure](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/measure_for_measure/32/557_2.png) [@Measure\_for\_Measure](https://boards.straightdope.com/u/Measure_for_Measure)\ **Post date:** [February 2, 2024, 7:30pm UTC](https://boards.straightdope.com/t/lets-talk-about-walmart-stock-splitting/997040/11 "2024-02-02T19:30:04Z")
Market timing refers to buying and selling asset classes (eg broad stock funds, bond funds, money market funds) in pursuit of superior performance. What the OP is doing is stock picking. That’s what the pros overseeing actively managed funds do. Superstrong believers in the efficient markets theory think that the risk-adjusted returns of all stocks are equal: if some stocks return more than others, it’s because they are riskier. I don’t believe that, partly based on my years past review of the literature. My take is that the SP500 (or the Wilshire 5000) are fine investments. If the OP was thinking of buying Walmart, I’d ask him about his theory of the market: why does he think the stock is mispriced? What does the OP know or believe that market professionals do not? I think it’s fine and well to be an investment hobbyist, but to do that you need a theory of the market. But the OP is thinking of selling WMT at a gain and that would involve paying capital gains taxes in April 2025, rather than in a future year. Delaying taxes is generally considered to be a good thing (since you can earn a return on that money in the meantime). Existing IRS rules also allow the cost basis of the stock to be adjusted upwards when you leave this planet – good for your heirs! When contemplating a stock sale, one way to think about it is to ponder whether you have any superior places to put the money. Maybe you anticipate expenses in a couple of years so you want to cash out. Maybe you want more exposure to stock index funds. An index funds typically zeroes out the idiosyncratic risk of any stock (though not any sector). So exchanging WMT for SP500 shares would lower that kind of risk. The stock split effect, if it exists, is much less important than the issues discussed above. Or the specifics of WMT’s prospects. ---
**Author:** ![RitterSport](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/rittersport/32/6326_2.png) [@RitterSport](https://boards.straightdope.com/u/RitterSport)\ **Post date:** [February 2, 2024, 7:38pm UTC](https://boards.straightdope.com/t/lets-talk-about-walmart-stock-splitting/997040/12 "2024-02-02T19:38:12Z")
> [@Measure\_for\_Measure](#): > > The stock split effect, if it exists… And, it really couldn’t, or else the price would adjust immediately when the split is announce, not when it happens. But, I agree that, in the unlikely event that it does, it’s a small effect relative to the other things that may affect Walmart’s stock price. If you’re Walmart, you might want a low stock price so individuals buy the stock and feel like they should go to your store instead of Target, since they’re shareholders. In reality, the price of a large stock doesn’t matter, because most of the volume is from large institutional buyers swinging huge amounts around in their index and other stock funds. ---
**Author:** ![Measure\_for\_Measure](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/measure_for_measure/32/557_2.png) [@Measure\_for\_Measure](https://boards.straightdope.com/u/Measure_for_Measure)\ **Post date:** [February 2, 2024, 7:49pm UTC](https://boards.straightdope.com/t/lets-talk-about-walmart-stock-splitting/997040/13 "2024-02-02T19:49:41Z")
> [@RitterSport](#): > > And, it really couldn’t, or else the price would adjust immediately when the split is announce, not when it happens. In theory or rather according to one theory. There’s a huge literature on market anomalies, which are instances where the efficient markets hypothesis is violated. IMHO market anomalies exist, but that doesn’t imply they are easy to identify, nor does it imply that they last forever. There is also a sizable subset of the literature devoted to stock splits. Here’s a quote from the abstract of one paper: “I subsequently analyze the abnormal returns around the stock split ex date according to the split factor and find significant abnormal returns only when the factor is greater than 2. The varying motives behind the splits may explain this finding.” Abnormal returns around the stock split ex date are pretty weird for the reasons you explained. That’s why it could be an example of an anomaly. But now we’re discussing whether you should day-trade on the basis of stock splits, not whether you should buy or sell WMT. ---
**Author:** ![Riemann](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/riemann/32/3133_2.png) [@Riemann](https://boards.straightdope.com/u/Riemann)\ **Post date:** [February 2, 2024, 8:42pm UTC](https://boards.straightdope.com/t/lets-talk-about-walmart-stock-splitting/997040/14 "2024-02-02T20:42:48Z")
> [@Whack-a-Mole](#): > > At the least it should make you more liquid with a lower share price which, I think, has some value. > > I suppose that also means the stock could be more volatile which may not be desirable (although some make money on volatility so…). A lower price does not imply either better liquidity or higher volatility. ---
**Author:** ![LSLGuy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lslguy/32/5813_2.png) [@LSLGuy](https://boards.straightdope.com/u/LSLGuy)\ **Post date:** [February 2, 2024, 11:28pm UTC](https://boards.straightdope.com/t/lets-talk-about-walmart-stock-splitting/997040/15 "2024-02-02T23:28:44Z")
> [@RitterSport](#): > > All that says that the stock splitting is irrelevant to whether you should hold, sell, or buy more. At the OP’s level of sophistication (and that of pretty much every retail investor), this is really the whole and entire story. The spilt is completely irrelevant to you and to anyone else buying, selling, or thinking about buying or selling WMT. You should do whatever you were going to do anyway the day before the split was announced. If that was sell, then sell. If that was hold, then hold. If that was “I haven’t paid any attention to WMT’s performance for a few months but now that I’ve been awakened I think I’ll do something just to do something”, well, IMO better to do nothing than do something for what amounts to a random reason. If you can articulate a price-performance case for selling or buying, then lay it out for us to critique. Not that you have to follow our advice, but we all might learn something useful. ---
**Author:** ![BigT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bigt/32/12044_2.png) [@BigT](https://boards.straightdope.com/u/BigT)\ **Post date:** [February 2, 2024, 11:41pm UTC](https://boards.straightdope.com/t/lets-talk-about-walmart-stock-splitting/997040/16 "2024-02-02T23:41:13Z")
> [@RitterSport](#): > > A split doesn’t change your economics at all. I don’t think there’s any evidence that a split predicts that the future price will be higher or lower – if it always tended to move in one direction or another, the market would adjust as soon as the split was announced. Interesting. I (with my lack of any experience) would have expected that a split would suggest the expectation that the price will continue to go up. And so, just by that alone, the price would be more likely to increase. That wouldn’t mean it would increase right away, of course. Just that smart people clearly think the price will continue to go up, and thus you would be better off holding. In other words, the fact they’re splitting the stock would I suspect immediately cause a small percentage of new sales, because such a split sends the message that the stock is doing well. ---
**Author:** ![RitterSport](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/rittersport/32/6326_2.png) [@RitterSport](https://boards.straightdope.com/u/RitterSport)\ **Post date:** [February 2, 2024, 11:52pm UTC](https://boards.straightdope.com/t/lets-talk-about-walmart-stock-splitting/997040/17 "2024-02-02T23:52:49Z")
It could be true, but the move would happen within minutes of the announcement, not right before or after it happened. ---
**Author:** ![DCnDC](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dcndc/32/2842_2.png) [@DCnDC](https://boards.straightdope.com/u/DCnDC)\ **Post date:** [February 3, 2024, 12:06am UTC](https://boards.straightdope.com/t/lets-talk-about-walmart-stock-splitting/997040/18 "2024-02-03T00:06:40Z")
This analysis says to wait and buy after the split. > **[Is It Better to Buy Before or After a Stock Split? Consider These 3 Charts. |...](https://www.fool.com/investing/2022/04/13/is-it-better-to-buy-before-or-after-a-stock-split/)** > > Several high-profile splits are coming up. When's the best time to accumulate shares? ---
**Author:** ![LSLGuy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lslguy/32/5813_2.png) [@LSLGuy](https://boards.straightdope.com/u/LSLGuy)\ **Post date:** [February 3, 2024, 2:08am UTC](https://boards.straightdope.com/t/lets-talk-about-walmart-stock-splitting/997040/19 "2024-02-03T02:08:27Z")
> [@RitterSport](#): > > It could be true, but the move would happen within minutes of the announcement, not right before or after it happened. This is another aspect of the disconnect between retail investors and the market. The market moved to accommodate the news of the split within a couple _minutes_. The OP (as an example of a retail investor, not picking on them as a person) heard about it a day or 3 later and is considering acting on this “new” news sometime in the next couple of _weeks_. All the action happened in the first 3 minutes a month ago by the time the OP gets around to doing something. In a game where timing matters, you can’t be 3 weeks late to a 3 minute event. ---
**Author:** ![China\_Guy](https://avatars.discourse-cdn.com/v4/letter/c/779978/32.png) [@China\_Guy](https://boards.straightdope.com/u/China_Guy)\ **Post date:** [February 3, 2024, 2:12am UTC](https://boards.straightdope.com/t/lets-talk-about-walmart-stock-splitting/997040/20 "2024-02-03T02:12:54Z")
> [@Whack-a-Mole](#): > > If you own one share worth $99 and there is a 3:1 split you now have three shares worth $33. You have not made money. This is true. There is no change in your stock holding value at the time of the split. Or say a different way, stock splits in and of themselves are completely neutral. That said, _perception_ can have an outsized affect. During the dot com boom years and early 2000’s, it was a self-fulfilling prophecy that a stock split was great news to be followed by a quick 20% gain in the stock split adjusted share price. Completely irrational, but because the herd of bull market “winners” acted that this was a fact, it did indeep become “fact” for a period of time. Newbies to a bull market always think that making money is easy, stock picking simple, and recent past behavior is a good indicator of future performance. That is, if almost all stocks rise after a stock split, then it’s a good “investment.” Doesn’t make it true when the crash comes, and the crash always comes. Markets are rational _over time_. But bull and bear markets can go on for much longer than it seems “logical.” [Next page](https://boards.straightdope.com/t/lets-talk-about-walmart-stock-splitting/997040.md?page=2)