Remember when Alphabet, the parent company of Google, did a 20-for-1 stock split on the NASDAQ in 2022? Did you buy its shares? Because Naspers, one of Africa’s largest technology conglomerates, is following suit.
When it comes to the stock market. Some may think it’s all just an expensive gamble with a bunch of imaginary numbers and prices for big players that make little sense. Naspers wants everyone to think differently.
State of play: It announced a 5-for-1 share split on the local bourse, the Johannesburg Stock Exchange (JSE), which will be effective from October 6. A stock split means each existing share is divided into smaller units, so the price per share drops, but the overall value of your investment stays the same. Companies with pricey shares typically use stock splits to make them affordable for smaller investors.
By the close of market on Tuesday, Naspers’ shares were trading for R5,885.40 ($339) per unit; this means buying 100 shares costs nearly R600,000 ($34,500) before the split, among the highest prices on the JSE and locking out smaller investors. With this new split, the R600,000 ($34,500) investment could become R120,000 ($6,900) for the same ownership stake.
Between the lines: Most of Naspers’ valuation comes from its roughly 23% stake in the Chinese technology giant, Tencent. Tencent is valued at approximately $760 billion. Despite Nasper’s high stake, it is only valued at $53 billion; this gap tends to raise eyebrows.
The split doesn’t change the company’s value, but it lowers the price per share, boosting liquidity and making the stock more accessible.
This move is part of a bigger clean-up: Naspers has been buying back shares and tidying up its structure to convince investors that its value should be closer to what its books show.Stock splits can’t solve everything, but they can help close that valuation gap by drawing in smaller investors and improving market trading activity.
