Companies advertise splits as a way to make expensive stocks more affordable for all investors. In fact, splits frequently cause stock prices to zoom higher immediately after they're announced. Studies do show that a stock price usually rises from the time a split is announced until it actually takes place. His findings have been borne out in the past few weeks as some well-known companies announced splits that sent their already high stock prices even higher. Drug companies Amgen and Pfizer joined the act, and McDonald's, McGraw-Hill and Alcoa also announced splits.
Stock splits can be positive news.
They always occur when a a stock price is very high, and that has presumably occurred because the company has done well, said Larry Wachtel, Prudential Securities' market strategist. They're often seen as a company's vote of confidence in itself. Splits also have the advantage of making it more likely that an investor who wants to sell shares later will be able to find a buyer, simply because the shares are now cheaper. But stock splits don't always work out to investors' long-term advantage. On Friday, Disney closed at 33.