Apple Inc. and Tesla Inc. shares rose to new heights Monday after their stock splits took effect, extending their meteoric rallies this year.
Apple added $4.23, or 3.4%, to $129.04 after the tech giant’s shares began trading following a 4-for-1 split, essentially giving investors three more shares for every one they owned. Tesla shares jumped $55.64, or 13%, to $498.32 after the electric-vehicle maker’s 5-for-1 split. Both stocks closed at records.
So, who benefits from a stock split?
Lowering
a company's share price can put its stock within the reach of smaller,
individual investors. That's good for the company's liquidity and
creates more demand for its stock.
On Monday, Apple, one of the most valuable companies in the world,
announced a 4-for-1 stock split, which will take effect August 31. A
single share was trading at about $450 Wednesday. Starting September,
that will be closer to $100.
This will be Apple's fifth stock split since going public.
The
price change will be more dramatic at Tesla, whose stock was trading at
more than $1,500 a share on Wednesday. Its 5-for-1 split, also set for
August 31, will bring an individual share into the $300 range.
That's
still not exactly cheap, but it's already been a boon to both
companies, whose share values have risen even further since they
announced their moves.
Some
companies, meanwhile, abstain from splitting their shares entirely, and
just watch their stock value rise ever higher. One such example is Warren Buffett's Berkshire Hathaway.
Berkshire's class A (BRKA)
shares ended Wednesday at nearly $320,000 a share. You can do the math
on just how many ways one might want to split that stock. The company's class B (BRKB) shares, which have been split in the past, are a far more affordable $213 a share.
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