Stock Split Magic
There are a couple of high-flying stocks which have been rocketing higher lately, largely because of looming stock splits. Indeed, they both split on the same day, August 31st. One of them is Apple………
And, even more extreme, Tesla:
I’m not sure what logic people are applying, thinking that the splitting of a stock means it’ll just keep going higher in perpetuity. I don’t think Tesla has split before, but Apple has a few times. Allow me to share a couple of examples of former Apple stock splits. I have marked them with a circled “S”, such as here:
……….and this one………….
My point is that I think these people are being utterly goofy. The split guarantees zilch.
How did you like this article? Let us know so we can better customize your reading experience.
Just exactly like we are frequently cautioned, the past does not guarantee the future. But some folks believe it does. I find the past to be far more reliably predictable than the future, most of the time.
Stock splits tend to be used by companies to boost a stock when there is not much left to boost the stock either because they already used most all their good news or if they don't have much in the first place. That said, the stock had to have run up sometime before for this to work. So I think it's more a look back and a short term gain than any long term indication of strength. In fact, I view it as the reverse unless the company is smaller which they sometimes use to increase their shareholder base and get more investors because they are smaller. This is not the case with Apple.