Jim Cramer likes Alphabets stock split and expects more retail investors to buy shares

CNBC’s Jim Cramer said Wednesday he expects retail investors will flock to shares of Alphabet in greater numbers after the Google parent completes its planned 20-for-1 stock split. Sign up and learn more about the CNBC Investing Club with Jim Cramer

What matters is threefold though first a split is assigned to regular investors regular investors okay that the company’s doing well better than we thought now we can try to stamp that thinking out but it won’t work that is always uh you hear it on the lightning round people always call about that i could tell them hey listen you’re dumb you’re wrong i’m not

Doing that i’m not bigger than the concept second individuals who don’t want the clumsiness of fractional shares and they are clumsy well eagerly start buying when they finally get a chance to pick up 10 shares of a juggernaut like google and finally given what this company’s brainiacs know about you about consumer preferences this is a decision that will have very

Wide implications alphabet knows you better than you know yourself they have your search history so if they think a 24 1 stock split is a good idea they’re going to be right other ceos will begin to question why they have to bend over backward to satisfy institutional investors hence this term institutional bias with high dollar amount stocks remember when money

Managers buy or sell stock they pay commission by the share so it’s always going to be cheaper for them to buy 10 shares of google at 2960 than it would be to buy 200 shares at 148 so the institutions have brow beaten all the ceos and cfos into going their way and letting these stocks get to prices that you and i can’t afford and that buy drives me crazy now this

Is all fabulous news to someone who’s always trying to get people into the stock market especially individual common stocks of high quality companies rather than high risk out of the money call options or idiotic etfs just averages i see them endlessly just to capture the flavor of the day i think that they are just just they just annihilate your capital at the

Same time big tech companies that have refused to split their stocks aren’t anathema ordinary investors i think google has finally realized that ordinary investors actually make for a great shareholder base these people including you who watch the show and this is what i’m talking about of course you don’t dump the stock on the first sign that the cost of user

Acquisition has jumped or the way most self-driving car technology is delayed or google cloud did make an additional 50 million dollars you’re in for the long haul that’s who they should want maybe the companies are starting to get it through their thick heads that they should want you as shareholders in the old days the stock split was a badge of honor it meant

Your stock had broken out of the pack and wanted to keep getting sponsorship from individual investors every study i’ve ever seen tells me that when stocks split they go up big on the announcement and then they stay up now i know it makes no sense mathematically once again you do not get a larger pencil okay but the stock market runs on emotion not on math yet

A stock split like this tells investors that alphabet is rewarding people for sticking with it you don’t see a lot of 10 or 20 or 30 stock split what’s the point the bottom line if a company like alphabet can split all right anyone can and i think everyone will and the geniuses at this company who knew better than we know ourselves say split then i think we’ll

End up welcoming a whole new cohort of investors to the market one that’s been missing out for years people with enough disposable cash to buy 10 shares of 150 stock but not enough money to buy one share of a 2 900 stock don’t miss a second of mad money follow at jim cramer on twitter have a question tweet cramer hashtag mad tweets send jim an email to madmoney

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Jim Cramer likes Alphabet's stock split and expects more retail investors to buy shares By CNBC Television