Losing profit after stock split
Losing profit after stock split
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graham.reeds · External communityPost link
External question — Personal Finance Stack Exchange
Author: graham.reeds
Original post: https://money.stackexchange.com/questions/142719
License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/
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I bought stock in
PNN.L
through my broker. According to them I bought the $500 dollars worth at 34.3120172899627 units at 1031GBX each on the 11/05/2021. This stock increased in value and on 02/07/2021 it was worth 1134.5GBX. An increase of roughly 10%. Then on the Monday 05/07 the stock went through a
reverse 3:2 split
. So according to my broker my holding went down from 34.31 units to 22.88 units. My opening rate was adjusted 1031 to 1546. So my holding is now 19% down on where it currently is - despite the normalised
LSE
graph continuously rising since March.
According to my calculations, I bought at 1546, the price rose until it hit 1700, it went through the 3:2 split. The stock price reduced to 1133, my purchase rate should be normalized to 1031 and then the stock value rose until it is at the point it is currently of 1239, meaning I should have a potential profit of 20.2%.
Which of us is correct?
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Bob Baerker · External communityPost link
External answer — Personal Finance Stack Exchange
Author: Bob Baerker
Original post: https://money.stackexchange.com/a/142722
License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/
Adaptation: HTML converted to plain text; contact email addresses removed.
In a reverse split, share price is increased by the split ratio and the number of shares is decreased by the split ratio. So for determining cost basis:
A) 34.31 units times 2/3 equals 22.88
34.412 x 1031 = 35,376 (pre split)
B) 1031 GBX times 3/2 equals 1546GBX
22.875 x 1546 = 35,364 (post split)
The numbers aren't exact because of decimal rounding but other than that, I don't see the problem.
What has happened to unit price since your purchase is another story.
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Quoted from Forex.com.bd-Editorial External answer — Personal Finance Stack Exchange Author: Bob Baerker Source score (net votes, not local likes): 2 Original post: https://money.stackexchange.com/a/142722 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. In a reverse split, share price is increased by the split ratio and the number of shares is decreased by the split ratio. So for determining cost basis: A) 34.31 units times 2/3 equals 22.88 34.412 x 1031 = 35,376 (pre split) B) 1031 GBX times 3/2 equals 1546GBX 22.875 x 1546 = 35,364 (post split) The numbers aren't exact because of decimal rounding but other than that, I don't see the problem. What has happened to unit price since your purchase is another story.
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