Do stock splits matter if you can just buy fractional shares?

Question

I understand that stock splits are meant to make stocks more affordable for more investors but if platforms allow fractional shares like Robinhood, does this matter as much? If theoretically more platforms supported fractional shares, would stock splits matter less and less?

In: Economics

Answer 1

Stock splits are like buying a pizza and cutting it into more slices. You still have the same amount of pizza, but it’s more manageable to eat. In theory, with fractional shares you could just buy what you want anyway, so splits may seem less important. But they can still hype up a stock or make it more psychologically appealing because it “feels” cheaper per share. Plus, not everyone uses fractional shares or platforms like Robinhood.