Will LUV Stock Split?

Will LUV Stock Split? LUV is the stock ticker for Southwest Airlines, a favorite for many travelers who like its unique affordable flyer models, and its presence as a smaller and more specialized carrier in an industry that often seems overly generic and institutional.

When it comes to LUV stock, analysts look at extensive history to try to predict future progress in equity values and general corporate success.

When Did LUV Go Public?

LUV went public on the New York Stock Exchange in June 1971. At the time, it issued 650,000 shares worth a few cents each.

In the intervening decades, LUV has emerged as a sort of blue-chip transportation company with pretty durable value, and a lot of name recognition at airports and online, where consumers increasingly shop.

What Is The Highest Southwest Stock Has Ever Been?

The all-time high for LUV was a share price of $66.99 in December 2017. Prior to that, the all-time high had been around $22 in the year 2000. If you factor in stock splitting, that $22 would be significantly more compared to current all-time highs.

It’s worth noting that LUV is now very near its all-time highs, at around $61 as of press time.

Has Southwest Ever Had A Stock Split?

LUV does have a history of stock splits. In just the past couple of decades, we see several instances where the company decided to split its stock, which means that stockholders get a greater number of shares in order to decrease the overall stock price.

As we point out with other articles on stock splits, there is no share value gained or lost in a stock split, it just changes the numbers to make the stock look more affordable.

We see that in the case of LUV, the company favors 3-for-2 or 1.5-1 stock splits. This is where someone who held two shares now has three shares, and the shares are each the correlating amount less in value.

LUV had a 3-for-2 stock split February 2001, another in July 1999, a third in August 1998, and another split of this kind in November 1997.

Is A Reverse Stock Split Good or Bad For Investors?

In a reverse stock split, the opposite happens – companies decrease the overall number of shares, propping up the stock price itself.

When we go into the reasons for regular stock splits, we show how a split increases access for small investors. So why would a company want to do reverse stock splits?

When you ask investors, you often come up with some negative indicators, for example, scenarios where companies want to delist and operate privately, or “shake out” smaller investors for some reason. It’s not generally a positive event in a company’s financial lifecycle. It often seems sort of sinister.

To be clear, LUV does not have a history of reverse stock splits.

Will LUV Stock Split?

Looking at recent filings and the chatter on Internet message boards, there are no real indicators that LUV is planning a stock split anytime soon.

Moreover, the share price itself doesn’t indicate that LUV would have incentive to do a stock split, although it is near all-time highs.

On the other hand, if LUV meets a price of $82 per share, which some analysts have talked about as a local target, we could see a stock split happen, where, for instance, a 3-for-2 split would help lower the overall stock price for people who want a share of Southwest Airlines but can’t afford $82.

LUV Stock Split: Good Or Bad?

Stock splits are, for the most part, neither good nor bad. They don’t really change the underlying value. They’re are more of an administrative detail that helps small traders and others look at the ticker in a different way.

Beyond that, though, stock splits and reverse stock splits can be confusing. When a new user logs into an exchange or brokerage or some other chart application and looks at a company’s financial history, they won’t understand how the chart reflects stock splits unless they go back and do the research. They may find baffling discrepancies between a company’s stock value decades ago and what it is today.

In that sense, stock splits are annoying for the relatively uninitiated trader. To those in the know, though, stock splits are not very noteworthy because the high net worth individual, whale or institutional investor still has their holdings. More of interest are metrics like earnings and revenue.

Will LUV Stock Fall After It Splits?

Let’s not confuse loss of value with lower share price after a stock split. After the stock splits, the overall share price will be lower. That is not a reflection of value changing, but instead, a clerical change related to the greater resulting number of shares in the marketplace.

As for whether it LUV will fall in value, investors should take that into account when they’re researching the potential for LUV to experience gains in future quarters. From a revenue standpoint, the future looks bright.

Is A LUV Stock Split Good Long-Term?

This really has to do with your outlook on the stock in question. To the extent that stock splits do not change core value, they’re neither good nor bad, short-term or long-term.

One thing that can be good long-term is for the company to do a stock split in order to show a lower per-share price, because it opens up access in the market, and gets people more interested. For example, somebody who would have only bought 50 shares at a pre-split price may buy 100 shares instead.

In these days of easy online brokerage services, a stock split can be a way to entice smaller investors to jump on board, and that can have some impact on the markets.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.