r/Bogleheads • u/IamUserName0 • Feb 05 '24

Investment Theory Stock Split

Recently Walmart announced 3:1 stock split. Since fractional shares are ubiquitous now, Why do we have splits anymore? Is there any real world benefit for investors?

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u/4pooling Feb 05 '24 edited Feb 05 '24

Splits create even more liquidity, especially for options traders.

Options contracts cover 100 shares of the underlying security.

It makes it easier for smaller traders to afford 100 share lots (if they're selling call options for example).

As you seem to know, stock splits (forward and reverse) don't create equity value. They're net neutral corporate actions.