It is equally uncommon for a major company and a Nancy Pelosi-owned stock to experience a 50% drop within a single day, which is exactly what appeared to have happened to Palo Alto (NASDAQ: PANW) on December 16.
Specifically, despite closing just under $500 on Friday, PANW shares collapsed to $196.92 nearly instantaneously on Monday and are trading at $202.25 at press time in the early morning of December 17.
Rather than a stock market anomaly, Palo Alto stock’s sudden drop can be attributed to a 2-for-1 stock split, and the technology giant remains 4.57% in the green in the last 30 days, albeit with significant volatility.
Furthermore, the split positively impacted the shares’ performance, reducing the share price, making it more affordable for retail investors, and attracting smaller investors who might have been priced out previously.
Indeed, some of the general benefits of stock splits include higher liquidity, reducing bid-ask spreads, and making it easier to buy and sell shares.
Companies usually split their stock after significant price appreciation, sending a positive signal that the company believes its stock will continue to perform well in the future.
In addition to its positive – if somewhat underwhelming performance for the technology sector – PANW stock is up 39.83% year-to-date (YTD).
As for Representative Nancy Pelosi, she appears solidly in the green on her Palo Alto Networks bet.
Despite her original purchase – made on February 12 and potentially worth $1 million – remaining dubious for a long time as PANW shares plunged more than 28% between February 20 and February 21, she is now in the green on this investment.
After the stock split is considered, Nancy Pelosi might have purchased $1 million worth of shares at about $186, meaning her stake is, given the press time price of $202.25, now worth nearly $1.1 million for a total profit of $87,000.
Her second purchase – worth up to $250,000 and made on February 21 – is even more successful as the buy price stood at about $131, and the stake is, at press time, worth approximately $386,000.