The day is finally here…
Tesla and Apple have officially “split.”
August has been an impressive month for the markets – pushing the S&P 500 to record levels. This upward movement officially confirmed a new bull market has started. On top of the S&P 500 moves, the Dow erased all of its 2020 losses as well.
As of yesterday, two significant stock splits, which we’ve talked about here before, officially happened. Apple kicked off a 4-for-1 split, while Tesla followed with a 5-for-1 split.
Now, if the idea of a stock split is new to you – here’s a simple explanation. Stock splits have been used over time by companies to make shares more accessible to the everyday investor. When a stock split occurs, keep in mind that the market capitalization of the company remains unchanged. A great way to think about it is that if you have a cake, you cut it into smaller pieces so more people can have cake.
So, for instance, let’s say you bought a share of Apple for $500 on Friday – this morning, you probably woke up to four times the amount of shares in your holding. But the share price is $125 or 25% of what you paid on Friday – but your total position value is unchanged.
Where’s the money?
Okay, I know there’s been a lot of technical talk, but I think it’s important to understand the process of a stock split – especially with stocks as big as Tesla or Apple because there’s a lot of FOMO happening right now.
Many analysts and investors have pushed the narrative that you might have missed out by not diving into these stocks pre-split. And they’re using the fact the recent growth of Apple and Tesla to bolster their claim. Since announcing the split, Tesla is up 66%, and Apple is up around 35%. But this influx is due to retail traders running into the stock ahead of the split, hoping the stock goes higher because of it.
But before you invest on hope, here’s what you need to know…
How can I get some?
Now, it is typical to see stocks rally 5-8% after a stock split. So, there’s no denying that Apple and Tesla are on fire. But it’s important to ask yourself how long you believe this growth is sustainable.
In my opinion, the rally we see right now isn’t. And I think we’re seeing a lot of young traders buying into the hype and FOMO, further pushing the stocks upwards. And that’s why for me, when it comes to purchasing Apple or Tesla because of the split – my answer is, I’m not chasing this rally.
Instead, I’m waiting for a day where the stocks have a big day; I’m talking all-time highs and wait for it to close on the lows. From there, I would compare the closing price to the price of the stocks before the split. If the price is right, and sitting in the range of the pre-split levels – that’s when you have the green light to add these to your lineup.
In the spotlight: Another TikTok update
TikTok has chosen a bidder for its U.S., New Zealand, and Australian businesses, and it could announce the deal as soon as today. The Microsoft/Walmart partnership and Oracle are the two top contenders. And as we talked about recently, the sale price is expected to be in the range of $20 to $30 billion.
But the ongoing battle between China and the U.S. could slow this deal down in a big way. In fact, it could even be completely derailed by the Chinese government. On Friday, China updated its technology export list to include artificial intelligence technology used by TikTok. The app’s Chinese parent company Bytedance would need a license from the Chinese government before it can sell to a U.S. company.
It seems as if the TikTok deal has been in the news for months now – but it’s for a good reason. This is a continually growing platform and becoming the leading app in the social media industry, reaching new audiences and territory.
Now, no one can honestly know what will come from this deal, but whatever happens, could end up impacting the market in a big way. So, I’ll be sure to keep you updated as this deal progresses.
So What Now?
Since the start of the Covid-19 pandemic, it’s seemed as though
every trader and investor was searching for the ultimate way to
play the crisis…
After all, industries that were ravaged by lockdowns had nowhere
to go but up, right?
Even though the recent growth in the S&P 500 and the Dow has
brought many opportunities for profits, it’s easy for individual
investors to get distracted by the constant stream of
recommendations from countless sources…
How are they supposed to know who to believe?!
For me, the most trustworthy recommendations come from
algorithms – like my S.C.A.N. trading system, which was designed
to analyze real data points, not just speculate…
In fact, a position we opened just last Wednesday is already up
over 37%, and there are many more on the horizon.
Click here now to learn more.