The stock split at Apple and electric carmaker Tesla could create more profits for both companies - temporarily reducing their shares to more affordable - at least temporarily in smaller shares.
Stock in the iPhone-maker co-founded by Steve Jobs fell to $ 124.81 after its 4-for-1 split, while Tesla's stock fell to $ 442.68 after the 5-for-1 split. Apple shares soared 70% earlier this year while Tesla jumped 435%.
"It makes absolutely no economic sense that a split should cause stocks to rally, but it almost always happens," Matt Maley, The Boston-based chief market strategist at Miller Tabak & Co. told Fox Business. "Common Sense Small Investors Can Buy Stocks."
While a stock split can not make the company "cheap" in any way, as Its market capitalization is the same, It offers retail investors who cannot afford to buy shares.
Discounts do not last long, however: History suggests that big-name brands typically witness their share price rally soon after the split.
According to data from London-based social trading and multi-asset brokerage company eToro, "The 10 biggest global brands that have carried out a stock split over the past 60 years have seen their share price rise by an average of 33% over the next 12 months".
While this is Tesla's first split in its 10-year history as a publicly-traded company, Apple shares have split four times before, achieving an average of 10%, according to eToro data.
The Cupertino, California-based firm's shares saw a 58% increase in the 12 months following the February 2005 split, but fell 61% after the June 2000 split, just before the dot-com bubble burst.
According to Dan Ives, an analyst at Vesush Securities, stock splits or mega-cap tech stocks look like they are going higher.
Ives told Fox Business, "Tech stock is at an all-time high and is going strong," adding behemoths like Facebook, Apple, Amazon, Google, and Netflix could rally more than 25% in the next six to nine months.
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