SPS Commerce announced a 2 for 1 stock split on July 25th, for shareholders of record on August 8th, to be paid on August 22.

So on Thursday Aug. 22 the stock closed at $104.83 and after the split shareholders got two shares for every 1 they owned and the stock price was adjusted appropriately, SPS was trading around $50 per share Wednesday.

Minneapolis-based SPS explained the rational for its stock split in its second quarter conference call. “We believe the stock will provide better liquidity and allow the stock to be more acceptable to a broad range of investors.”

But stock splits are an increasingly rare corporate action companies take to manage the price, but not value, of their shares.

The last large Minnesota-based public company to issue a stock split was Fastenal in May and before that Graco in Dec. 2017. But since 2010 only seven Minnesota public companies among the S&P Composite 1500 have done splits - none in 2013, 2014 and 2015

According to data from S&P Dow Jones Indices in 1998 there were 1,125 stock splits and reverse stock splits from all publicly traded companies, by 2008 that number had dipped to 338, and last year there were just 227 stock splits.

And every year since 2008 reverse stock splits, usually reserved for smaller struggling companies looking to boost their share price, have made up more than half of the total number of splits.

Companies used to target a share price range more closely by using stock splits. “You could almost plot when a stock hit a certain level,” said Howard Silverblatt, senior index analyst at S&P Dow Jones Indices who started at the company in 1977. “If they liked to keep  the stock around $60, and when it hit $75 or $80 they would split it,”

There are still legitimate reasons for conducting a stock split but greater institutional ownership and faster and cheaper trades for both institutional and retail investors creates less incentive to manage to a share price range.

 “Companies have shied away from it (splits) and investors haven’t reacted negatively,” Silverblatt said.

 It's also become more acceptable for companies to have triple-digit and even four-digit share prices.

See Amazon (around $1,758 per share), Alphabet Inc. ($1,168 per share) and Berkshire Hathaway which famously has never had a stock split and its A shares now trade around $300,000 per share.

But even humbler companies like the retailer and distributor of auto parts, AutoZone, trade around $1,092 per share and fast casual restaurant chain Chipotle Mexican Grill trades at $836 per share.

Targets 20% surge in stock price last Wednesday put its share price into all-time high territory greater than $100 per share (split adjusted).

In 1996 then known as Dayton Hudson the company’s shares were above $100 per share, but they did a 3 for 1 stock split, then had another 2 for 1 split in 1998 and another 2 for 1 in 2000. So on a split adjusted shares are still trading at an all-time high.

If the stock continues to trade above $100 would it do another stock split? When contacted a company spokesperson replied via email “We’re focused on serving our guests and advancing our strategy. We don’t have anything to share on that topic.”

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