You millennials might not be old enough to remember it, but stock splits used to be a relatively common thing.

You’d have your 100 shares of some stock trading at $30. It would go up and up and up some more, because of course I picked a winner. It would hit $60 or $70 a share a few years later and then management would announce a stock split. All of a sudden you go from having 100 shares to 200, and you feel like an absolute baller. Never mind the reality nothing has changed. 200 shares just feels better, y’know?

Nowadays there are barely any stock splits. Dollarama is the only company I can remember recently that did one, which was back in 2018. It split its shares 3-for-1 and then promptly fell shortly after. I guess Apple had a pretty famous one a few years ago too.

Fun fact: I once knew a guy who would short stocks that had recently split, saying they were due to fall. This probably didn’t work out well.

This begs the question — where have all the stock splits gone? Have they disappeared forever?

The future of stock splits

To understand why stock splits are no longer a thing we have to dig into some of the inner workings of the stock market. Dig deep, baby. Like you’re searching your nostril for that one annoying booger.

Back in the day before online brokerages were common, you actually had to call a guy to trade stocks for you. I’m not even that old (Nelson’s wife: LOL) and I remember the days when discount brokers were on the other end of a phone line.

Trading was done by humans back then too, and to make things easy we’d divide shares into “lots”, which were typically 100 shares each. Anything that wasn’t a multiple of 100 was considered an odd lot and would have to be given special consideration.

Companies wanted the average retail investor to be able to buy their stock easily. Thus they’d make their shares reasonably priced enough so even a small-time investor could easily buy 100 shares. $60 per share means an investor is shelling out $6,000 for 100 shares. That was probably too much for the average person back in 1997, so they’d split the stock.

Nowadays nobody cares about lot sizes these days, and it shows. Just take a look at some of the big share prices out there:

  • Amazon: $1,654.93
  • Google: $1,084.00
  • Booking Holdings: $1,795.67
  • Markel Corp: $1038.88
  • Fairfax Financial: $616.04
  • Constellation Software: $961.36

I threw in a couple Canadian companies there so we wouldn’t feel left out. I’m a pretty generous guy, guys.

There are also an assload of companies that trade at anywhere from $100-$500 per share, stocks that sure don’t look like they have any intention of splitting soon.

The case for more stock splits

I’m the first to admit a stock split doesn’t matter nowadays. I don’t really care if I’m buying 50 shares of something worth $100 a share or 2,500 shares of something worth $2 per share. They both represent $5,000 investments.

But still, owning 2,500 shares of anything makes me feel like an absolute baller. Do you know how much money I’d have to put out to own 2,500 Facebook shares? I’m looking at US$364,575. That’s about $1.3 billion once converted back to Canadian. Give or take.

OKAY GUYS GEEZ. MATH IS HARD.

I own 17 Facebook shares today, an investment worth about $3,300 when converted back to my home currency. So when I tell people I own a “few” Facebook shares I’m not lying!

$3,300 is a reasonably-sized investment to have in one company. But I just can’t help but to feel inadequate when I look at my account and it says I own 17 Facebook shares. How lame.

Yes, it is cheap psychology and my big powerful brain should be able to overcome it. But my lizard brain just can’t help it. Why won’t you let me feel like a big deal? I don’t get this at any other point in my life. My cat harasses me for its basic needs and I don’t get to boss anyone around at work anymore. I’m basically society’s bitch (you want me to pay my taxes? SCREW YOU, BIG BROTHER) and all I want in return is to have low priced stocks so I can feel like a big deal. Is that too much to ask?

Sorry, that went off the rails a bit there at the end.

Tell everyone, yo!