A stock split doesn't change a company's fundamentals in theory, but the move will attract retail investors who were otherwise limited to low-dollar stocks, CNBC's Jim Cramer said Wednesday on his "Mad Money" show.
The stock "price tag matters" with the young generation, and companies need the young demographic investor group to be counted as shareholders, the CNBC host said.
"We know what happens after the split," he said. "This new cohort of investors, the ones who love low-dollar amount stocks, will start buying and holding these best-of-breed names rather than the darned penny stocks."
Mega-cap companies are "ignoring" the small investor, and Cramer said doing so is a mistake. After all, retail investors are often "more stable shareholders" compared to hedge funds that are known for offering "no loyalty," he said.
10 Stocks To Split: Cramer's list of 10 stocks that should be split to attract a broader investor base includes:
E-commerce and retail giant Amazon.com, Inc. (NASDAQ: AMZN).
Casual fast-food chain Chipotle Mexican Grill, Inc. (NYSE: CMG)
Streaming video company Netflix Inc (NASDAQ: NFLX)
Chipmaker Nvidia Corporation (NASDAQ: NVDA)
Fast-growing cloud play Adobe Inc (NASDAQ: ADBE)
Wholesaler Costco Wholesale Corporation (NASDAQ: COST)
Home improvement retailer Home Depot Inc (NYSE: HD)
Social media giant Facebook, Inc. (NASDAQ: FB)
Tech giant and cloud company Microsoft Corporation (NASDAQ: MSFT)
Musk Always Cared About 'The Little Guy' And Tesla Stock Split Shows That: WSJ's Higgins
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