For eTro, in fact, stock splits frequently cause a significant increase in the share price of a brand (about +33% per year) and Tesla and Apple have just made two.
This could see their shares grow by more than a third in the next 12 months. Already yesterday both companies were affected by a sharp rise in share price: Tesla ended the day up 12.6%, while Apple gained 3.4%.
Analyzing 60 years of data, in fact, eToro has found that share splits frequently cause a significant increase in the share price of a company and these two giants are not exempt from these trends.
What is an equity split?
Companies make stock splits to reduce the price of their shares, making them more attractive to potential investors.
For Apple, this is the fifth stock split, and for Tesla, it is the first one.
As part of its analysis, eToro analyzed the share price movements of the 10 largest companies in the world that have made a „share split“. These are Apple, Alphabet (Google), Microsoft, Amazon, Coca-Cola, Disney, Samsung, McDonald’s, Toyota and Intel.
Since its inception, Apple has split its shares four times and the value of these shares usually grew by 10.4% in the year following the split.
Specifically, in the 12 months following the February 2005 and June 2014 stock splits, Apple shares rose 58.2% and 36.4%, respectively. However, we also witnessed the 61% drop in share value as a result of the share split in June 2000, which was attributable to the speculative bubble.
Adam Vettese, Analyst at eToro, explained:
„Tesla and Apple are already two of the best companies in the U.S. stock market and all the evidence suggests that the splits will bring wind in the sails to the stock value. Our study shows that, on average, the big brands that have made stock splits see their shares rise by 33% within a year. Although past performance is no guarantee of future earnings, it is likely that this time we will see Tesla and Apple exceed that level of growth. This is possible because retail investors are increasingly engaged in the Ethereum Code financial market, and many find it beneficial to invest in companies that produce the products they love and use on a daily basis, and Tesla and Apple are among them. Therefore, it is likely that the possibility of investing in two such popular companies at more competitive prices will prove too tempting to refuse for these investors. The numbers of the eToro platform show how the desire to invest in both Tesla and Apple has already grown since the announcement of the stock splits“.