Apple and Tesla take off (again) after stock splits

Many of the businesses featured on Money advertise with us. The opinions are ours, but the compensation and
extensive research determines where and how companies can appear. Learn more about how we make money.

Since Apple and Tesla announced their Distribution of stocks earlier this summer, investors and analysts scrambled to understand what the move could mean for companies that recently hit registration Tops. Now the day of the stock split has arrived.

Apple stock closed at $ 124.81 – the adjusted price for the division – on Friday and immediately rose when the market opened this morning, reaching $ 129.95 by early afternoon. Meanwhile, Tesla closed at $ 442.68 on Friday and also started to rise to $ 481.04.

The jumps are not representative of the entire market, as the The Dow Jones Industrial Average lost 200 points.

What the stock split will look like for you

A stock split occurs when a company splits its shares so that the number of shares an investor owns increases (or decreases in the case of a reverse split), without affecting the shareholder’s actual stake in the stock. business. A 2-to-1 split would turn one stock that trades at $ 100 into two stocks that trade at $ 50, while a 4-to-1 split would turn it into four stocks of $ 25.

If you owned Apple stock before August 24 or Tesla stock before August 21, these stock splits will happen automatically – you don’t have to do anything.

Apple’s split is four to one, so if you owned 100 stocks trading at around $ 400, you now owe 400 stocks with a valuation of $ 100 per share. And Tesla was five to one, which means that if before the split you owned 100 stocks trading at around $ 1,500 each, you now own 500 that are valued at around $ 300 each.

And don’t worry about paying extra taxes – you will not need to pay taxes on the extra shares you get after splits.

So what’s the next step?

Companies don’t tend to spin off like this if they think there is a possibility that their stock price may go down. And Apple and Tesla enjoyed a booming 2020 despite market volatility and the pandemic-induced recession. Apple also has a new product it can bank on: the iPhone 12, which should be released this fall. It comes after the August 19 announcement that it had become the first American company worth $ 2,000 billion.

Tesla, meanwhile, is seeks to increase its sales with its activities in China.

And the stock split may mean more interest from retail investors as the new prices are much more accessible. (Tesla stock closed at $ 2,213.40 on Friday, which is likely out of the realm of a buy option for many mainstream investors).

While splits make company shares more affordable, Apple and Tesla shares are much more expensive than they were at the start of 2020 – Apple up 70% and Tesla up 440% before the split . This is good news for those who took advantage of the gains, but it also makes both stocks a lot riskier for investors now.

Ads by money. We may be compensated if you click on this ad.A d

Discover the investing app that’s changing the way people invest in 2021

Follow other investors, find companies to believe in, invest with any amount of money.

View application details

More money :

Congratulations! You’ve won big bets on tech stocks. Now start selling them

Warren Buffett just bet big on gold miners. Should you?

High-yield savings rates have plummeted, but those neglected accounts still pay 2% or more

Comments are closed.