Stock price movements after a split announcement vary by stock. Even when a split is viewed as a positive catalyst, subsequent price movements are driven by business factors. This analysis uses data to examine changes in supply and demand after the number of retail investors increases.
As stock splits become increasingly common in Japan's equity market, the initial reaction immediately after an announcement varies by stock, and splits are sometimes viewed as a positive catalyst. Over the longer term, however, price movements after a split are heavily influenced by changes in the business environment and profit margins. Specifically, among 44 stocks that announced splits, approximately 70% rose the day after the announcement, with the average price change observed at +2.49% from the previous day.
Debate over one-year returns after a split has highlighted the limitations of relying on averages. Bank of America's long-term data shows that split stocks posted an average gain of 25.4% 12 months later, but approximately 30% of stocks were down, with average losses reaching 22% in some cases. Morningstar's classification likewise showed a close balance between 34 gainers and 20 decliners, suggesting that split stocks tend to be a group with substantial price swings.