To The Moon

Are you ready for $Broadcom(AVGO)$ 's stock split on July 15.

In the U.S. stock market, there are not many stocks with a four-digit share price. For like:

$MicroStrategy Incorporated(MSTR)$, $MercadoLibre(MELI)$, $First Citizens BancShares(FCNCA)$, $White Mountains Insurance(WTM)$, $AutoZone(AZO)$

$Chipotle Mexican Grill(CMG)$ $Seaboard(SEB)$ $Booking Holdings(BKNG)$ $NVR Inc(NVR)$ $Berkshire Hathaway(BRK.A)$ .

To some extent, a high stock price can serve as a sign of a company's success, indicating that the stock is performing exceptionally well in the market.

However, fundamentally, a high stock price does not equate to the company's fundamentals, nor does it necessarily mean the stock is overvalued.

It must be acknowledged, though, that high stock prices can indeed deter small investors with limited capital.

To expand the investor base, stock splits are popular in the U.S. stock market. Stock splits mostly occur in companies with very high share prices because when the price becomes too expensive and unaffordable for investors, it can affect market liquidity. Therefore, companies may opt to lower the stock price to attract investors.

Major corporations such as $Tesla Motors(TSLA)$ , $Amazon.com(AMZN)$ , $Alphabet(GOOGL)$ ,& $Apple(AAPL)$have all undergone stock splits. Thus, a stock split is generally seen as a signal of good company performance and an increase in stock prices.

It should be noted, however, that a stock split only changes the number of shares and the stock price, not the company's fundamentals and value.

For example, if a company has a stock price of $100, with a total of 1 billion shares, its market capitalization is $10 billion. After a 1-for-10 stock split, the stock price drops to $10, but the number of shares increases to 10 billion, keeping the market capitalization unchanged.

Therefore, to understand the intrinsic value of a stock, one should look at basic valuation metrics such as the price-to-earnings ratio, price-to-sales ratio, and price-to-cash-flow ratio, rather than just the stock price."