Throughout its history, Alibaba, the Chinese multinational technology company that specializes in e-commerce, retail, internet, and technology, has undergone several stock splits. Known for being one of the world’s largest internet companies, Alibaba’s stock has been a subject of interest to many investors. In this blog, we delve into Alibaba’s stock split history, the most recent stock split, and the implications of these splits on the company’s stock price.
Alibaba’s Stock Split History
Before we proceed, it’s important to note that, as per the available records, Alibaba had no stock split in its history before the upcoming one. This makes the current stock split a significant event in the company’s history.
Latest Alibaba Stock Split
[table id=330 /]
Alibaba announced in July 2022 that it planned to split its shares on an 8-for-1 basis. The shareholders approved the decision, and the split was scheduled for the second quarter of 2023, although the exact date needed to be specified. As stated by Alibaba, this stock split was to increase the flexibility in the company’s capital-raising activities, including issuing new shares.
The Impact of the Stock Split
The fundamental value of a company is not inherently impacted by a stock split. It simply divides a company’s existing shares into a more significant number, thus reducing the price per share but maintaining the same market capitalization. Therefore, the 8-for-1 split means that for each share of Alibaba owned, the shareholder would now own eight shares, each worth one-eighth of the original share price. This maneuver can make the stock more affordable for retail investors and sometimes lead to a surge in demand and cost due to increased accessibility.
Before the split announcement, Alibaba’s shares had been under significant pressure, with the stock down more than 50% over the past 12 months due to various factors, including regulatory scrutiny. The stock split announcement positively impacted the stock price, which rose 6% the day after the information.
FAQs
What is the history of stock splits for Alibaba?
Alibaba (BABA) has conducted one stock split in its history, an 8-for-1 split announced in July 2019 and executed in July 2020.
How does a stock split impact the price of Alibaba’s stock?
Following a stock split, the share price adjusts in proportion to the split. For instance, in Alibaba’s 8-for-1 split, the cost of each share was divided by eight, making the shares more affordable for individual investors.
What was the primary motivation behind Alibaba’s 8-for-1 stock split?
The main reason Alibaba opted for a stock split was to increase the flexibility in the company’s capital-raising activities, including issuing new shares.
How did Alibaba’s stock perform after the 8-for-1 split?
Following the stock split, the share price was adjusted as expected. The stock’s performance, though not limited to, is subject to various other factors that include the company’s financial performance, market conditions, and broader economic factors.
When might Alibaba conduct another stock split?
The company’s board decides to conduct a stock split of directors. It is influenced by many factors, such as the current stock price, the company’s capital structure, and market conditions. There is no public information about any upcoming stock splits for Alibaba.
