As everyone is waiting, Apple’s shares are already split by four and Tesla’s by five on today’s premarket. Similar financial operations for two stocks that have exploded in recent months.
The shares of Apple and Tesla are already very expensive, and they are getting split to make them more affordable for small investors with no access to fractional shares. The split will generate more emotional moves on both stocks, the thing that we will observe on the market opening.
Few hours before the market opens, we can see that Tesla is up 2.96% and Apple 1.40%, which hints to a hot trading day.
What is a stock split, and what does it mean for Tesla and Apple
This operation, called “split”, consists in splitting a share into other shares with a less expensive unit price.
In reality, you have to imagine a big cake that has been getting bigger for about ten years, but with fewer and fewer guests around the table to share it.
If the value of the S&P 500 index, the main U.S. stock market index, has increased fourfold since the 2009 crisis, only 10% of Americans share 87% of the cake.
The stock markets are therefore increasingly flourishing, but still more unequal. And this trend is not about to be reversed any time soon. Stock splitting is unlikely to make much difference.
The American middle class away from stock market euphoria
With the pandemic and the crisis, not sure it will get better. When Democratic presidential candidate Joe Biden talks about rebuilding the middle class, he also thinks about this kind of situation.
Especially since we are in crazy times, where a handful of technology giants are driving up the markets in such proportions that it makes you dizzy.
Apple’s stock market value has risen 10% in the last two weeks alone, which means it has gained $200 billion in value. And 200 billion is twice the value of the Boeing group.
The technological giants strengthened their monopoly during the pandemic and are emerging stronger than ever.
As interest rates are very low, we buy shares, it’s more profitable and these in particular. Inequitable, very expensive, and dominated by very few large companies, the stock market reflects the dangerous image of a world disconnected from the reality of the street.
Even if you cut the cake into smaller slices, for Apple and Tesla, the party will always be crazier.