Table of Contents
The Previous 28 Years Will We Soon Witness One?
Ford Stock Split: Examining the potential effects of a future stock split at Ford Motor Company while learning from the past.
Latest Stock Split News About Ford
On March 9, 2022, Amazon Inc. shocked everyone by announcing a 20:1 stock split after market hours. The final stock split for Amazon, which had been long overdue, occurred in 1999.
Although the vote of shareholders is due on May 25, 2022, and if passed at that meeting, it will go into effect right away, it is anticipated to begin trading after the split on June 6, 2022.
Many prominent firms like Tesla, Apple Inc, and Alphabet (parent company of google) has lately declared a stock split in the previous couple of years, and it seems like there is competition for stock splits once again after more than two decades, as it appeared to happen from the early 1990s to 2000.
The important thing to remember in a stock split situation is that post-split, no investor’s total ownership changes. Also, the share split had no impact on the company’s market capitalization.
Considering the aforementioned two considerations, it appears that the share split should be a non-consequential event and have no impact on the share price (beyond dividing it by the ratio of the split).
After all, the ownership of the company (pizza) remains the same whether you choose to eat a giant pizza or a variety of its pieces. However, this logic has repeatedly been shown to be false, at least in the case of large corporations.
For Instance, When Amazon Inc
Recently announced a share split, its share price increased the following day by approximately 6% in erratic market share.
Although a share split technically has no impact, it does add sentimental value by making shares more accessible to ordinary investors, which more often than not leads to an increase in share prices after the split.
Since the 19th of March 1982, Ford Motors Inc. has been one of the oldest firms to trade on the NYSE. It has been aggressively generating EVs and is diversifying as needed. The first stock split was announced in 1962, and the most recent was in 1994. For reference, the stock split is tabulated here.
History of The Ford Stock Split
Date Ratio Price (Close) Price the day before Change
July 6, 1994 2:1 28.87 57.87 (July 5) -0.22%
Jan 13, 1988 2:1 39.37 79.38 (Jan 12) -0.81%
Jun 3, 1986 3:2 54.25 80.75 (Jun 2) 0.77%
Dec 2, 1983 3:2 41.50 62.88 ( Dec01) -1.00%
Jun 27, 1977 5:4 46.75 57.63 (Jun 24) 1.40%
May 31, 1962 2:1 – – –
The following is a list of conclusions drawn from the history of Ford Motors:
Ford Stock Split: A string of splits over a 20-year period
Ford disclosed the first split in 1962 and announced the second split 15 years later in 1977. However, between 1977 and 1994, the company declared five splits in less than 17 years.
As the table above shows, Ford has announced stock splits every five to six years during the past two decades. Nevertheless, given that it has been over 28 years since the last separation, management is keeping quiet about it.
Mixed Reactions Following the Ford Stock Split
In general, investors see that splits instill sentimental value, which boosts the value of the stock in the near run.
The stock splits of Apple Inc., Amazon Inc., Tesla, and many more businesses show the same thing. Ford Motors, meanwhile, is not in the same situation. After the stock split, the general public did not respond favorably to it.
Since the separation, the share price only increased twice (1986 and 1977). (adjusting price beyond the split ratio).
In three separate instances (1983, 1988, and 1994), it decreased (adjusting price beyond the split ratio). After the 1983 split, it even moved lower the next day by 1.00%. We can infer from the foregoing that Ford Motors’ stock split has not been very successful.
Will Ford Motor Company Announce Another Stock Split in 2022?
Management makes the decision for a stock split, and it cannot be foreseen in advance. The board of directors must approve it in a shareholder’s meeting. Nonetheless, the likelihood of another stock split in the near future, particularly in 2022, is quite low.
The same has justifications. The company’s share price comes first and foremost. Stock splits are primarily justified by the need to lower their cost for individual investors so that they can include them in their portfolios.
For instance, To Appear “Cheaper” To Individual Investors
Amazon Inc. recently announced a 20:1 share split when its share price reached $3000. Ford Motors, meanwhile, is not in the same situation. Its share price is $16.04 (as of 11.03.2022), so there is no reason to announce the split in order to drive down the price since investors can already afford it.
Another argument against a share split in the near future is that analysts draw this conclusion from previous splits. Every time the share price has surpassed $50, Ford has announced a stock split. Ford Motors declared it once in 1988 when share prices reached $80.
Since Ford Motors’ share price has only increased by $3.56 over the past five years, yielding returns of just 28%, analysts do not expect the current share price to reach $50 anytime soon.
Analysts expect the share price to remain consolidated in the $10 to $20 range unless significant changes occur in the company.
Ford Motors has declared that starting with the following fiscal year, its EV division will disclose earnings independently.
The big thing for the future is electric vehicles. After a successful spinoff from the conventional vehicle business, it’s possible that we will see Ford’s EV division go public, and we might also see a split in the EV firm.
According to the current situation, it is not improbable that a share split will occur before the price of an individual share reaches $50.
People Also Ask
Q: What is Ford Stock Split?
A: Ford Stock Split refers to the process where a company divides its existing shares into multiple shares. Companies typically do this to increase the number of shares outstanding while reducing the price per share.
Q: Has Ford Motors had any stock split in the last 28 years?
A: No, Ford Motors has not had any stock split in the last 28 years.
Q: Why hasn’t Ford Motors had any stock split in the last 28 years?
The company’s board of directors usually makes the decision to split stock based on various factors such as market conditions, financial performance, and future growth prospects. It is possible that Ford Motors has not seen the need for a stock split in the past 28 years due to its strong financial position and steady growth.
Q: Will we see a Ford Motors stock split soon?
A: It’s difficult to predict if and when Ford Motors will have a stock split in the future. While a stock split can make the company’s shares more accessible to a wider range of investors, it is ultimately up to the company’s board of directors to determine whether or not a stock split is necessary.
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