When a company such as Magic Software Enterprises splits its shares, the market capitalization before and after the split takes place remains stable, meaning the shareholder now owns more shares but each are valued at a lower price per share. Often, however, a lower priced stock on a per-share basis can attract a wider range of buyers. If that increased demand causes the share price to appreciate, then the total market capitalization rises post-split. This does not always happen, however, often depending on the underlying fundamentals of the business.

Looking at the MGIC split history from start to finish, an original position size of 1000 shares would have turned into 3000 today. Below, we examine the compound annual growth rate — CAGR for short — of an investment into Magic Software Enterprises shares, starting with a $10,000 purchase of MGIC, presented on a split-history-adjusted basis factoring in the complete MGIC split history.