Coca-Cola Board Wants To Split Stock

Already leader in the beverage industry, Coca-Cola wants more. The company aims to double its revenue within the upcoming 8 years. Along with that aim, Coca-Cola board announced it intends to split the stock. It is the first stock split at Coca-Cola of the last 16 years.

Coca-Cola first made it in trading in 1919. Since then the board has operated stock splits only 10 times. Now the board plans to do it an eleventh time. If their decision is approved, then Coca-Cola shares are going to jump to 11.2 billion, doubling the presented day stock figure of 5.6 billion.

Muhtar Kent, Chief Executive at Coke, said that “a stock split reflects our desire to share value with an ever-growing number of people and organizations around the world”. However, the decision needs shareholders’ approval. They will vote on the matter July 10. If the company gets the approval, then the distribution of split shares will begin August 10.

Warren Buffett is among the Coke shareholders, with a stake worth about $15 billion. He is likely to say “No” to Coca-Cola’s proposal to split the stock. Just recently Warren Buffett dismissed the option to split the stock at his own company Berkshire Hathaway. Plus, in a letter he wrote back in 1984, he was obviously against such decisions. He argued:

“One of the ironies of the stock market is the emphasis on activity. But investors should understand that what is good for the croupier is not good for the customer” said Warren Buffett, adding that “a hyperactive market is the pickpocket of enterprise”.

The Coca-Cola board split stock proposal came after the company’s strong first quarter earnings. Last week, the company had quarterly earnings that exceed estimates from Wall Street analysts. Coke Chief Executive Muhtar Kent said back then about the company’s performance in U.S.:

“Despite its struggle with a sustained period of relative high unemployment, we are pleased to see some early signs of a slowly improving macroeconomic environment”. Helped by the raising China business, Coca Cola’s upcoming quarterly results look even more promising.

Analyst Ali Dibadj told Reuters that Coca-Cola’s strong results show that things in the U.S. “are getting a little bit better”, even though the economy isn’t “back to what it used to be”.

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