Business Journalist, David Rose, says stock splits are becoming increasingly popular as listed companies look for ways to increase liquidity in their stock prices.

“We tend to have a psychological perception in Jamaica that when stock prices reach double-digits, we believe that you know it’s expensive,” Rose said on Taking Stock with Kalilah Reynolds.

His comments come in light of the recent announcement that the board of Stationery and Office Supplies Limited approved a 9:1 stock split.

SOS is a local manufacturing and distribution company of stationery and office supplies. The company also manufactures the SEEK book brand.

The company has been on an impressive run of success for the past two years recording its best year ever in 2022.  SOS recorded revenues of $1.7 billion, while net profits doubled to $256 million. 

The momentum carried over into their first quarter for 2023 when the company’s revenue increased by 22% to $519 million. They also set a new record in March with $207 million in sales for the month. 

Rose noted that despite the positive news, SOS’s stock has traded at volumes below 100,000 for the last year resulting in very little movement in the stock’s price. He said by bringing down the stock’s price, a split will help increase the volumes traded.

A stock split is simply the splitting of one share into multiple shares. In this case, SOS’s board approved a nine-to-one split which means one share will be split into nine. It will also split the share price nine ways, making the stock cheaper. So, it doesn’t affect the value of the stock. 

SOS’s stock closed on June 30 at $23.16- so a nine-way split would bring the price down to the $3 range.

SOS shareholders will vote to approve the stock split at the company’s extraordinary general meeting on July 25.

Rose also noted that the proposed stock split comes at a time when SOS is expanding.

The company recently announced plans to expand into Trinidad and Tobago and the Cayman Islands.

They are also reportedly pumping some $60 million into building out another storage warehouse on its Beechwood Avenue property.