Stock split? A banana split is more satisfying (2024)

— -- A: Wal-Mart prides itself on always offering low prices. So you're wondering why the retailer isn't cutting the price of its stock, using a stock split.

When a stock is split, existing shareholders get additional shares, and the share price is adjusted accordingly. For example, Wal-Mart is selling for about $44 a share. If it split 2-for-1, shareholders would get one additional share for each share they already own. And, at the same time, the price of each share would drop from $44 to $22.

Companies usually split their stock to keep the share price within the comfort range of individual investors.

Ask Matt readers know the share price, by itself, is essentially meaningless when trying to determine how expensive a stock is. Read more about stock splits here.

Wal-Mart has split its stock 11 times since going public in 1970. But there doesn't seem to be any magical share price that triggers the split. For instance, it split shares in August 1975 when the stock was $23 but also in April 1999, when the stock was $89.75.

My advice? Forget about stock splits. You may own more shares, but the stock price falls, so you're no better off. Focus on other things.

Matt Krantz is a financial markets reporter at USA TODAY. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at mkrantz@usatoday.com.