Stock Splits (Apple and Tesla): A Lesson by Beez
I'm not supposed to be working on my 28th birthday, but when you love what you do it doesn't feel like work, so thank you for taking time out of your day and reading this blog post.
I hope you are doing well, staying moisturized and staying out of the way. I want to talk about stock spilts, explain what they are and how you can take advantage of them. This is not investment advice, please do your own research.
Currently, Apple (AAPL) and Tesla (TSLA) are going up like crazy because they have both announced an upcoming stock split.
So what is a stock split?
A stock split is when a company increases the numbers of shares in a company. The cost of each share is divided by the number of shares that you will be given. So for example, if a company has a stock price of $100 and does a 2 to 1 stock split . Your 1 share will turn into 2 shares and the new price of 1 share will be $50. 2 Shares x $50 = $100, the total value of your shares stays the same.
Apple is splitting 1 share for 4 shares (4 to 1 split) and Tesla is splitting 1 share for 5 shares (5 to 1 split).
So for every 1 share of Apple (AAPL) that you own, you will be given 4 shares (1 AAPL -> 4 AAPL) .
For every 1 share of Tesla(TSLA) that you own, you will be given 5 shares (1 TSLA ->5 TSLA).
Split Date August 28th
You must own the Apple and Tesla shares by August 28th. The Apple and Tesla Split Date is August 28, 2020 - shareholders are due to split shares after the close of business on this date. On August 31, 2020 the Apple and Tesla common shares will trade at the new split-adjusted price.
Apple's stock has split four times since the company went public. The stock split on a 7-for-1 basis on June 9, 2014 and split on a 2-for-1 basis on February 28, 2005, June 21, 2000, and June 16, 1987. According to Apple’s Investors Relations FAQ.
Typically Apple’s stock price either takes a small dip or continues to go up after the stock splits.
You may need to put your phone in landscape mode or view the charts on your laptop/desktop.
Chart of Apple stock split in 2014
Chart of Apple Stock Split in 2005
How can you take advantage?
If you do not have the full $400+ for an Apple share or $1600+ for a Tesla share you are able to take advantage of stock splits by purchasing fractional shares. You are able to buy any amount that you are comfortable with and take advantage of the stock split. So since Apple is splitting 4 to 1 , you could buy about $100 worth of Apple Shares and have a almost a full share on August 31st. Current Apple price divided by 4 = the amount of share you need to buy for a full share
For Tesla you can do the same thing. Current Tesla price divided by 5 = the amount of share you need to buy for a full share
If you want to just try this out, even $20 will allow you to get your feet wet.
**If you are familiar with options** you can buy an option call and ride the momentum up to the stock split and profit off of stock split announcements for strong companies. Amazon could possibly be the next big company to announce a stock split, so we will have to stay tuned.
Where to buy fractional shares?
You can purchase fractional shares on M1. You can make a Pie just for stock splits. Click here to add this stock splits Pie
If you aren't familiar with M1 check out my free M1 guide, Click here for free access
If you are looking for a more straight forward approach, another place that you can purchase fractional shares is Robinhood. You can use my link to sign up for Robinhood. Click here to join Robinhood
Again, this is not investment advice, please do your own research. Goodluck!
"Reverse engineer your life. Live a life of abundance",