Last week, Google (NASDAQ: GOOG ) (NASDAQ: GOOGL ) split its stock into two classes, issuing a stock dividend and creating a new class of non-voting stock to keep control in the hands of the tech giant's founders. But the Google split has raised the broader question of whether stock splits are really necessary.
In the following video, Dan Caplinger, The Motley Fool's director of investment planning, looks at how stock splits have changed over the years. Historically, the need to buy and sell stock in 100-share lots made share price important, with splits allowing stock prices to stay in ranges where 100 shares would be affordable for many investors. But now that you can buy single shares of stock, many companies have chosen not to split at all. Dan points to Priceline.com (NASDAQ: PCLN ) , Chipotle Mexican Grill (NYSE: CMG ) , and Intuitive Surgical (NASDAQ: ISRG ) as examples of high-priced stocks that haven't done share splits. Dan concludes that when you don't have a corporate purpose like Google's attempt to keep voting control, stock splits aren't nearly as important as they used to be.
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