Should AMR stock split to attract new investors?

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Sep 22, 2002
JetBlue announces stock split
by Wendy Blake
In a move that could bring more investors on board, discount airline JetBlue Airways announced a three-for-two stock split on Thursday.
By lowering the share price, the split could attract more investors and potentially increase the upside value of the stock. It will bring the number of outstanding shares in the company to about 63 million, and will be effective Dec. 12 for shareholders of record Dec. 2.
JetBlue has been one of the few U.S. carriers making a profit as air travel declines and the industry becomes increasingly competitive. Last year, the start-up posted a $38.5 million profit while most major airlines reported losses.
But demand for shares in the company, which went public in April, has been weak lately. JetBlue canceled a secondary offering scheduled for last month because of low interest by major shareholders. And when the company’s lock-up period expired on Oct. 9, giving insiders a chance to sell 33 million shares, many did, sending JetBlue’s stock price down by 15.7%. J.P. Morgan Partners just reported that it was one of the sellers, dumping 2.4 million shares of stock valued at around $82.1 million.
JetBlue shares got a short-lived boost from the news of the stock split Thursday, rising 2% to $37.20, but they were up just 0.4% in late-day trading, at $36.57. The stock is down from a 52-week high of $55.15 in May. but still higher than its IPO price of $27.
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