Should you buy Super Micro Computer before or after the stock split? Here’s what history says.

The countdown has begun. Last tech stock split, from Super Micro Computer (SMCI -0.50%)is scheduled to happen in a few days — and the action will open at the split-adjusted price starting October 1. Supermicro announced a 10-for-1 split during its earnings report last month, joining other market leaders and big tech players in launching such an operation in recent times. Nvidia, Broadcomand high flyers in other industries such as Walmart and Chipotle Mexican Grill they split their stock this year.

Companies generally decide to split shares when their stock has risen considerably, reaching levels that investors will not want to pay, even if the valuation remains reasonable. For example, shares of Nvidia and Broadcom traded above $1,000 before their stock split, a level that could be a psychological barrier for some investors.

Now, as the Supermicro deal approaches, you may be wondering if it’s a better idea to get into the stock right away, before the split, or if you should buy once the deal is complete. Let’s take a look at what history has to say.

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What does a stock split do?

First, let’s consider some additional details about stock splits. These operations lower the price of a share by issuing additional shares to current holders. But that doesn’t change the total market value or anything fundamental about the company, so it’s not a reason to buy or sell a particular stock.

That said, these operations could attract more investors over time because they open up the investment opportunity to a wider range of investors. To become a shareholder, instead of paying hundreds or thousands of dollars for a share, you can get in for a much lower price.

Now, let’s look at what recent history shows us about the stock’s performance before and after the stock split. This year, Nvidia rallied 27% in the two-week period between its split announcement and the actual operation. Broadcom rose 14% from the announcement of the split until the deal was completed about a month later.

From the completion of these splits to today, performance has been weak, with Nvidia losing 4% and Broadcom little changed.

If we expand our focus to include companies outside of tech, history tells us that Walmart advanced about 8% from its split announcement to the actual operation, and has grown 32% since then. Chipotle gained about 2.5% during the few weeks between the announcement and the split, and has since lost about 13%.

All of this tells us that investors have typically profited by buying stock as soon as the company announces a split — but gains can drop after the deal.

Is history correct?

It’s important to remember that history isn’t always right when it comes to predicting the future, and every company’s situation is unique. Supermicro’s stock is actually down 25% since its stock split was announced — that’s not due to the upcoming split, but headwinds. A short report in late August hurt the stock significantly, and a delay by Supermicro in filing its 10K annual report further hurt appetite for the stock.

And it’s also important to remember that a major gain after a stock split, as we’ve seen with Walmart this year, isn’t due to the split itself, but to a company’s fundamentals. Walmart reported earnings that beat analysts’ estimates, and the company even raised its forecast for the year.

So history tells us that a stock split announcement is often positive for an immediate stock, but what sets the long-term trend for a stock is the earning power and prospects of that company. And that means it really doesn’t matter whether you buy Supermicro stock today or after the split. If you’re holding for the long term, a good or bad performance over a period of a few weeks won’t affect your return very much.

This is great news for investors because it means you don’t have to rush into an investment decision, time it around a stock split, and instead have plenty of time to get in on interesting players who would could multiply earnings over time.