On Tuesday, Shopify announced approval of its 10 to 1 split share. What does this mean for investors and the future of Shopify?
Issuance of a new “founder stake” for CEO Toby Lutke
100% Ownership of Shopify
Shopify’s CEO and founder, Tobi Lütke, will release a new “Founder Share” regarding the stock split. The new stake will represent 100% of his stake in Shopify.
What this means is that after the stock split, there will be two classes of stock: common stock and founder stock.
The move was designed to ensure Lütke retained control of the company even as it grew and became more valuable. It also aligns with the interests of shareholders and employees, who will now have a vested interest in Shopify’s long-term success.
What does a stock split mean for investors?
In the short term, a stock split may also increase the price of Shopify stock as more investors become interested in owning a part of the company.
So what does all this mean to you? If you’re an investor, stock splits are good news. This means that you can increase your ownership interest in Shopify without having to pay more money. And if you’re considering investing in Shopify, a stock split could make the company more attractive to you.
Either way, it is a vote of confidence by management in the future growth of the company.
When does a stock split happen?
The stock split will take effect on June 28, 2022. This is the date on which Shopify will issue new shares to registered investors as of June 22, 2022. If you own stock in Shopify on this date, you will receive an additional nine shares for each share you own.
For example, if you own 100 shares in Shopify, you will receive an additional 900 shares on June 28, 2022. The new share price based on the split will take effect on June 29, 2022.
What does a stock split mean for the future of Shopify?
While the move doesn’t have any immediate financial implications, it does indicate that Shopify is confident in its future prospects. The company is expected to continue to grow at a rapid pace, and stock splits will make it easier for investors to own part of the company.
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Tamilla MacDonald has worked as a financial advisor to the Army for 13 years. She has taught personal finance classes in every subject from credit, to life insurance, as well as all other aspects of financial management. Ms. MacDonald is an AFCPE certified financial advisor who has helped her clients achieve their short and long term financial goals.