High share prices are becoming a status symbol

{"text":[[{"start":3.5,"text":"Warren Buffett has never been afraid to go against the crowd. A drop in the number of companies splitting their stock to reduce their prices suggests bosses are coming around to his long-held view that splits are a meaningless gimmick. Technology and rule changes are helping ditch decades of corporate orthodoxy. Market psychology is being affected too: pricey shares are becoming positively prestigious. "}],[{"start":27.25,"text":"Like changing a $20 for two $10 bills, simply dividing a company’s existing shares into smaller denominations does nothing to change its value. Buffett’s refusal to split Berkshire Hathaway’s A shares has pushed them to $760,000 apiece, although its B shares, issued in 1996 to make the company’s stock more accessible, are a more manageable $500. "}],[{"start":50.95,"text":"Splits have been a popular practice, most notably in the US, in part because they tended to raise trading volumes and lower spreads. In the boardroom, splits have long been considered a signal of management confidence in a company’s prospects. Market studies have shown that, on average, dividing a stock produces an almost immediate pop of 3 per cent. Traders still hope to profit by identifying likely candidates."}],[{"start":75.95,"text":"Yet since 2021, when global stocks last fell heavily, a mere 56 companies a year on average have split their stock despite a rallying market. That’s down from an average of 76 in the years preceding the 2021 slump, according to data provider Wall Street Horizon. In the first six months of 2026 — typically the busier half — 37 companies have split their stock, the same as a year ago. "}],[{"start":null,"text":"

"}],[{"start":103.5,"text":"Rule changes have played a part: US-listed shares used to be dealt only in round lots of 100, meaning price outliers were often traded in so-called odd lots, which had higher transaction fees because of their inconvenience. Since November, there are four tiers with only those under $250 bundled as 100-share lots. Technology is probably a bigger driver still, with the rise of fractional shares making it almost irrelevant that, say, Google parent Alphabet trades around $350: a $100 slice can be bought just as easily."}],[{"start":138.7,"text":"It used to be a widely held belief that retail investors preferred shares with a lower value because they were seen to have more room to rally. But even during the decades when carefully managed share counts kept prices averaging a rough but remarkably steady $35, studies showed the biggest companies were managed to trade closer to $50. That suggests a bias towards price as an indicator of quality. "}],[{"start":161.85,"text":"If price is no longer a limiting factor, it seems reasonable that higher numbers provide added cachet. What then might be a natural level today? Speculation swirls around flash memory provider Sandisk, whose rocketing shares recently topped $2,000. There are 14 companies in the S&P 500 whose shares trade above $1,000, including Goldman Sachs and Eli Lilly. Nvidia divided its shares by 10 two years ago as they neared $1,000, but those of Google topped $2,500 before it split each unit into 20 in 2022. "}],[{"start":197.75,"text":"Buffett’s thinking on splits is in vogue then, but not for the reasons he espouses. While the price of shares bears little relation to their actual value, it is hard to fault companies for wanting to appeal to those who equate higher numbers with success. "}],[{"start":219.45000000000002,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1783236023_5127.mp3"}