It's been a big season for stock splits lately. Tech giants Amazon.com and Alphabet finally decided that it made sense to get rid of their four-digit price tags for a single share, implementing 20-for-1 stock splits that will bring both of their share prices back down to around $100 apiece. Tesla has also joined the fray, announcing its plans for a 3-for-1 stock split that will be its second in two years.

Yet by far, the announcement back in April from Canadian e-commerce disruptor Shopify (SHOP -2.37%) to do a 10-for-1 split was the most unusual such move in recent memory. Even under the normal standards under which companies decide to do stock splits, Shopify's decision seemed hesitant at best. Moreover, coming in conjunction with a controversial provision that changed the company's capital structure to give its CEO more power, the purpose of the Shopify stock split isn't quite clear.

What Shopify is doing

On its face, Shopify's stock split looks the same as any other company's split. It gained approval on June 7, so Shopify shareholders will soon have 10 shares for every one they currently own.

The price of the stock after the split should be roughly one-tenth of its current price. The switch for trading purposes is anticipated to occur before trading begins on Wednesday, June 29.

The explanation for doing the stock split was similar to what you'd see from most companies splitting their shares. Shopify's information circular said that the move would make its shares more affordable to a broader segment of the population, allowing it to diversify its ownership base for the benefit of all shareholders.

A bit late to the game

Yet the timing of Shopify's split announcement is what's so odd. The e-commerce platform provider didn't choose to do a stock split back in 2019, when its stock climbed to nearly $400 per share, roughly 15 times where it had traded following its 2015 IPO. When the stock climbed above the $1,000 mark in the early stages of the COVID-19 pandemic in June 2020, there wasn't any apparent discussion about making the shares more affordable to individual investors.

There was ample opportunity for Shopify to consider a stock split during its long ascent. The share price exceeded $1,000 for more than 1 1/2 years. Other tech disruptors, such as The Trade Desk, moved forward with stock splits during that bullish phase.

Yet it was only after the stock started to drop substantially that Shopify chose to do its stock split. By April, shares were down to $600, off by nearly two-thirds from where they'd traded just months earlier. Since then, Shopify has seen its stock fall by roughly another 50%.

Splits don't matter, but this does

It really doesn't make any difference whether investors have 10 shares worth $30 a piece or a single share at $300. With most brokers offering fractional-share trading, it's become even more of a non-issue.

Yet the Shopify split became somewhat controversial because it came along with a provision to issue founder/CEO Tobias Lütke a special class of stock to maintain substantial voting power over the company, as long as he retains an active role. Many institutional proxy advisory companies recommended that shareholders reject the proposal, and in the end, it received less than 54% support, excluding shares controlled by Lütke.

Shopify is facing the challenges of consolidating its rapid gains during the COVID-19 pandemic, as well as integrating acquired businesses and looking to fight back against competition. Uncertainty about its longer-term prospects has weighed on its shares.

Once the distraction of a stock split is finally behind it, Shopify will have to prove to investors that it can get back on track and eventually see its share price return to the levels at which splitting shares seemed appropriate in the first place.