[masterful]

So why not make it split of 9-1 or 15-1

It isn't a "ponzi scheme", just a way to make the stock more affordable for "consumer" investors and something that many companies do when their stock gets above a certain level.

I've owned a small amount of Disney Stock for about 30 years and it's split three times I think. Usually just after the stock goes above $100.

[Dunt Dunt Dunt]

So why not make it split of 9-1 or 15-1

Who knows.... maybe $100 a share was their target price and a 7 to 1 split got them there? Maybe they used a dartboard and seven was the number that the dart landed on? Maybe they hired some finical firm to do an analysis and after months of study and millions in fees they picked seven?

In the end it doesn't really change the value of what you already own if you are a shareholder, nor does it change the value of the company..... Maybe a few more investors buy in and increase the value slightly, but no one expect the price to drastically change overnight (at least not until the iPhone 6 sales come out).

Why would a company issue a stock split?
Sometimes, the stock of a company like Apple will climb so high that its price is hard to afford for many average investors. Rather than allowing high prices to discourage buyers, the company will issue a stock split.

When a company issues a stock split, they are literally splitting the shares of stock into pieces. For example, the recent Apple stock split was 7:1. If you owned 10 shares at $644 per share before the split on Friday, you owned 70 shares at $92 per share on Monday morning.

Since the pizza analogy has been beaten to death, let's use an apple pie: more slices does not mean more pie. The market cap of Apple did not change. Notice that there is no inherent value creation or destruction that results from the split itself: before the split you owned $6440 worth of stock, and after the split it is still $6400 worth of stock until trading starts on the day of the split.

[Jakob Greve]

I heard stated it's the weight of the stock, not it's price. If the stock is devided one to seven it fits in the Dow as one of the heavier stocks there. if not it's to heavy to be in there. for some obscure reason the dow use the value of the single compared to the total numer of say apple stocks. So if the stock is to pricy compared to the total number/value of Apple shares you need to split it if you desire to be in that index.

Don't know if I buy into the explanation - as why would they surddenly wanna be in the dow, but thats what I read anyway...

Apple Stock Split Removes Obstacle to Inclusion in Dow - Bloomberg

[masterful]

Anyone understand what does it mean when stock shares are diluted?

#BBFactCheck

[KenFletch]

If a company that has 1 million $10 shares issues another . 100,000 shares to raise cash the extra shares dilute the existing value. The company might end up with 1.1 million 9.50 shares. If the market has confidence the cash will be used well it might add value. Like 1.1m 10.25 shares.

Liquidity also plays a part, adding shares that cant be sold will dilute value.



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