Question:

If I purchase a stock right before a split, would my purchased stock still be split?

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A perfect example is occuring right now. There's a company called Ebix that has an upcoming split. Their 'record date' was on August 4, the split takes place at end of August. It's a 3:1 split, stock price now is around $110.

From my limited knowledge of splits, only stock purchased before the record date are 'eligible' for the split. What does this mean?

So if I purchased a stock today (after the record date), and the split occured, would my single $110 stock change into a single ~$35 stock?

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2 ANSWERS


  1. No..  You should have 3 shares after the split


  2. The record date is meaningless. Don't concern yourself with the terminology. It's simply an accounting term. The split will take care of itself. There is nothing to ever worry about. In its very simplest form, assume a stock is trading around $100 and is to split 2-1. If you pay $100 for the stock AND you still hold it when it actually splits, (ie, when it starts trading at about $50 --assuming it hasn't fallen in price dramatically), then you can be assured that you will receive the "extra" shares. However, if you pay $50 for the stock, then you know that the shares have already split.

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