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Tesla and Apple performed stock splits after Friday's close
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Both stocks rallied to fresh all-time highs on Monday
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Amazon (AMZN.US) next in line?
Tesla (TSLA.US) and Apple (AAPL.US) performed stock splits after the close of Wall Street session on Friday, August 28. Tesla performed a 5-for-1 stock split while Apple made 4-for-1 split. Market rewarded these moves with both stocks rising to fresh all-time highs yesterday. Apple gained 4.2% while Tesla surged as much as 12.1%!
Tesla surged more than 12% yesterday and finished just shy of the $500 mark. This translates to a pre-split valuation of almost $2,500! Source: xStation5
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Open account Try demo Download mobile app Download mobile appStock split itself does not have an impact on shareholders' holdings but splits are often followed by strong upward moves. Why? Because shares are more accessible for investors with small capital, especially retail investors. Take Tesla stock as an example. Prior to Friday's split you had to pay up to $2,300 to get a grip on just one Tesla share. To put this figure into context, median weekly wage in the United States in Q2 2020 was $1,002 according to the US Bureau of Labor Statistics. This means that a lot of investors were simply unable to afford this stock at a pre-split price. Even if they were able to afford it, including Tesla stock in small portfolios could make them poorly diversified.
Apple (AAPL.US) broke out of a short-term trading range yesterday and printed a fresh all-time high at below $130 mark. When it comes to Apple, attention will now be focused on the incoming launch of new iPhone range, possibly in October. Source: xStation5
Following recent stock splits investors no longer have to pay thousands of US dollars for a single Tesla share. Apple shares can be purchased for around $130 instead of nearly $500 at the close of Friday's session. However, investors should keep in mind that just as the price was divided by 4 in terms of Apple and 5 in terms of Tesla, so have been earnings ascribed to each share. Nevertheless, stock splits can be incorporated into one's trading strategy as tech stocks tend to rise after such events. Amazon (AMZN.US) is one of the stocks speculated to be the next in line after its price rose from around $1,750 at the end of 2019 to almost $3,500 at the end of August 2020. Positive market reaction to splits from Tesla and Apple, could be another incentive for Amazon to make such a move.
Share price of Amazon (AMZN.US) almost doubled this year. Price of Amazon shares marks an even higher barrier to entry than the pre-split Tesla price therefore the e-commerce giant could decide on a similar move soon. Source: xStation5
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