Broadcom has announced a 10-for-1 stock split, and the financial world is frenzy. As a trader, here’s everything you need to know about the upcoming change and how it affects your Broadcom holdings.
What’s Happening?
Broadcom (AVGO) will be splitting its stock 10-to-1 in less than a week, dropping share prices to around $170. Starting July 15, 2024, Broadcom shares will trade at one-tenth of their current price.
Broadcom announced the split on July 12, and since then, the stock has gained about 15%. The split is positive because it makes Broadcom more accessible to investors and signals the company’s optimism about its future.
Remember, while splits are exciting, they don’t change the company’s valuation or market value.
What Does This Mean for You?
For those holding AVGO CFDs, here’s how the stock split will affect your positions:
- Increased Number of Shares: Your CFD shares will multiply by 10. Hold 10 shares now? You’ll have 100 after the split!
- Adjusted Values: Open price, take profit, and stop loss values will be divided by 10, keeping the overall value of your holdings the same.
Example:
Let’s break it down with an example. If you hold 1 CFD share at today’s price of approximately $1,745.99, after the split, you will have 10 CFD shares priced at $174.59 each. Your investment value stays the same, but your share count increases!
Important Dates to Remember:
- July 12, 2024: If you own AVGO CFDs, you will be issued extra shares after market close.
- July 15, 2024: The market opens with 1/10th the price on AVGO.
Why Is Broadcom Splitting Its Stock?
Broadcom’s shares have taken off in recent years, climbing about 500% in five years, now trading above $1,700. Just this year, shares of the company are up 31% and 82% over the past 12 months driven by investor enthusiasm for artificial intelligence.
Splitting the stock makes Broadcom’s shares more affordable. While $1,000 can’’t even buy one share of Broadcom, post-split it could buy several.
Why Do Companies Split Their Stock?
Stock splits are mechanical operations used to increase the number of shares without changing the company’s value. Firms tend to do this when their stock price has risen to an amount that might make it difficult for individual investors to purchase shares. Having a larger number of cheaper shares to attract more buyers can help improve liquidity by increasing trading activity.
Broadcom’s 10-for-1 stock split is a significant event, offering exciting opportunities for investors. Stay informed and make sure your trading strategies are aligned with these upcoming changes. Happy trading!
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