Chapter 199 Radical stock split on September 29 strengthens liquidity

Based on the comprehensive judgment of the general environment and Baidu's rapid development at various levels, we finally chose the 1 to 10 dismantling method.Although Baidu’s share price did not reach the 20-40 USD recommended by the investment bank, the stock split was relatively successful, and investors were still very optimistic about it, because it rose a lot when the split was announced. Also rose a lot. In my memory, this has never happened in the global capital market in recent years.The more common ones are 2:1 stock split or 3:2 stock split, that is, one share becomes two shares, two shares become three shares, and higher ones are relatively rare.

In order to enhance the liquidity of the stock, on May 13, 2010, Baidu carried out a 10:1 stock split. On the day of the stock split, Baidu's share price rose by 9.5%.Later, Robin Li talked about this matter in a speech at the National Library. He said that splitting 10 shares for 1 share is really radical, and it has never been seen in recent years. Therefore, there are many debates within Baidu about the plan for splitting shares.To this end, Robin Li once specifically went to Cisco CEO Chambers and investment banks for advice. At that time, there were a lot of debates within Baidu. Some colleagues thought that when the stock cost hundreds of dollars a share, it was easy to say, and the market would think it was a very successful company. .Going to see some Internet news today, some commented that the market value of Apple has surpassed that of Microsoft, because the market value of Microsoft has dropped a lot in the past 10 years, while Apple has risen a lot.In fact, one very important reason is that Microsoft splits its shares frequently.Stocks around $20 right now give the wrong impression that the company isn't very successful.Therefore, the suggestion given by the investment bank is between 1 split of 6 and 1 split of 10, 1 split of 6 is relatively safe, and 1 split of 10 is too radical.Investment banks believe that retail investors are more likely to accept stocks listed in the United States at a price between US$20 and US$40. If the price is below US$20, they will think that the company is not doing well, and if it is more than US$40, they will feel that it is expensive.

Based on the comprehensive judgment of China's Internet market and Baidu's future development prospects, Baidu executives finally chose a 10-for-10 stock split. The stock split in the first half of 2010 was restored to the comparable price of the initial public offering at that time, which was about 600 to 700 US dollars per share.At that time, this was still a risk, but now it seems that this choice is relatively correct. Capital ultimately serves the development of the enterprise, not the other way around.