By making their shares more affordable — at least momentarily — to small investors, stock splits at Apple and electric-car maker Tesla will spur more profits for both companies. Steve Jobs co-founded stock in the iPhone-maker fell to $124.81 after its 4-for-1 split while Tesla’s stock fell to $442.68 after a 5-for-1 split. Previously, Apple shares had risen by 70% this year, while Tesla’s soared by 435%.
Ticker Security Last Change Change %
AAPL APPLE INC. 129.19 +4.38 +3.51%
TSLA TESLA INC. 479.35 +36.67 +8.28%
“It makes absolutely no economic sense that a split should rally a stock but it almost always does,” Matt Maley, chief market strategist at Miller Tabak & Co. based in Boston, told FOX Business. “The general feeling is that smaller investors are required to buy the stock.”
Although a stock split does not make a company “cheaper” overall, since its market capitalization stays the same, it offers a chance to buy at lower rates to retail investors who were unable to purchase previous-level shares.
However, the sales don’t last long: History shows big-name brands usually see their share price rebound shortly after breaking.
According to data from London-based social trading and multi-asset brokerage firm eToro, the 10 largest global brands that have carried out a stock split over the past 60 years have seen their share price grow by an average of 33 percent over the next 12 months.
Although this is the first split in Tesla’s 10-year history as a publicly traded company, Apple shares have previously split four times, increasing an average of 10 per cent, according to eToro results.
Apple Stock: In the 12 months following a split in February 2005, the Cupertino, California-based firm ‘s stock saw a 58 percent raise but dropped 61 percent in the aftermath of a split in June 2000, which occurred just before the dot-com bubble burst.
Stock split or not, according to Wedbush Securities analyst Dan Ives, mega-cap tech stocks look as if they are going higher.
“Technology stocks are at an all-time high and higher,” Ives told FOX Business, adding that behemoths like Facebook , Apple, Amazon , Google and Netflix raising rally as much as 25 per cent over the next six to nine months.