STOCK TALK

Stock Talk: Stock Splits

Perfect time to grab some Apple Shares in my opinion.

So shortly after Apple’s earnings, Apple announced a 4-1 stock split happening by August 24. This would be Apple’s fifth stock split, following the 7-1 stock split that happened years ago. You ask yourself. What is a stock split? Defined by Investopedia, a stock split is defined as when a company divides the existing shares of its stock into multiple new shares to boost the stock’s liquidity. Still no clue? Stock splits happen when a stock is highly overvalued and want to make their stocks more accessible and affordable to investors who now have the money to purchase a share. So for Apple holders, they will be getting 3 extra shares once the split happens. Personally, this is good news for me since I have a decent amount of money chilling in my portfolio. I will personally be buying around $7.5k worth of Apple shares and leaving that sit in my portfolio. With Apple finally being valued at around $100 again, I think it is a great time for many and others to grab a couple Apple shares and let it sit.

Today there was some crazy news involving Tesla. And yep, following Apple’s move, Tesla is going to have a 5-1 stock split. The 5-1 stock split will take place exactly a week after Apple’s split. To be honest, it was about time we see a split with Tesla. As much as I believe Elon’s dream and goal with the company, there is no way in hell that Tesla should be trading at $1500+ PER share. Tesla is 100% overvalued. I thought hitting $1000 price point was insane, but when it almost hit $1800, I just had no words for Tesla. The sky is the limit right? Now with Tesla being possibly traded at around ~ $300 range after the split, I wouldn’t highly recommend one to buy too many Tesla shares. I don’t think we’ll ever see it hit past $1500 mark anytime soon.

Overall, I would highly recommend you guys to grab some Apple shares. It doesn’t matter if you buy before/after the split, considering you will get the same amount of shares after the split happens. But Apple at roughly $100 a share? Don’t mind if I do. That is my personal opinion. I’m going to be doing that with Apple for now.

Take this statement with a grain of salt: A stock split should not be the primary reason for buying a company’s stock. While there are some psychological reasons why companies split their stock, it doesn’t change any of the business fundamentals. Remember, the split has no effect on the company’s worth as measured by its market cap. In the end, whether you have two $50 bills or single $100, you have the same amount in the bank.

Also, I stumbled across this article that was written 6 years ago. Here’s a simple analogy: “Having a little ice cream every once in a while may be fine. But too much of a good thing isn’t so good.” If we see another major company such as Google or Amazon announcing a stock split right after Apple and Tesla, then something is definitely up. Tesla announcing a stock split 2 weeks after Apple does so is quite suspicious. And these aren’t a 2-1 stock split. These are 4-1 and 5-1 stock splits, making the volume for the shares even higher than it was before.

Sources:

https://www.investors.com/how-to-invest/investors-corner/too-many-stock-splits-can-be-sell-signal/

https://www.cnbc.com/2020/07/30/apple-just-announced-a-stock-split-heres-what-that-means-for-investors.html

https://www.cnbc.com/2020/08/11/tesla-announces-five-for-one-stock-split.html

https://www.investopedia.com/articles/01/072501.asp

0 comments on “Stock Talk: Stock Splits

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: