Lowering a stock price tricks investors into buying more
When a company splits its stock, the math of your investment doesn't change, but your brain perceives the lower price as a clearance sale you can't miss.
A stock split is essentially the financial version of cutting a large pizza into more slices; you have more pieces, but you still have exactly the same amount of food. Despite this, investors routinely flood into stocks after a split. This behavior is driven by the left-digit effect, a cognitive bias where a price drop from $100 to $50 makes the stock feel significantly cheaper, even though the company's underlying value and your ownership stake remain identical.
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