Basically my theory is that stock splits may be an indicator of a market decline. Or market sentiment about a market decline.
GME, GOOGL, TSLA, AMZN, SHOP being examples of companies that have or will likely split this year. Because realistically the optics are worse if a stock like GOOGL were to fall from $3000 to $1500 in a downturn than if the stock were to drop from $150 to $75 in a downturn following a split.
Tesla felt overpriced at $1,200 and so by splitting, the sting of a potential market downturn is taken away or certainly mitigated to a degree. In these scenarios you can claim there was a split rather than your stock cratered from $1,000+ and the impact feels lighter.
And so someone much smarter than me could probably get the data points together and I believe make a good case for a correlation between a high number of stock splits in a given year and the performance of the market overall in the following year. What do you think?
Why am I wrong? Why am I right?
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