If you are an investor looking for market trends, you probably want to hear what I have to say today. A new era of the market is upon us, and it is one that is likely to be rounded up in companies around the world. Recently, technology giant Apple (AAPL) and electric vehicle company Tesla (TSLA) announced a stock split, which led to a spike in their shares and the response from investors shows that it is a major in the moving market Trend can be formed.
These two names certainly went about this process in different ways. For Apple, management announced a stock split with its Q3 earnings flick, which could also be prompted by the Dow Jones Industrial Average to make a major change. Tesla’s announcement went out of the blue a few weeks later, perhaps as the company saw how investors cheered on Apple’s shares after the announcement of its split.
(Source: Yahoo! Finance – Black arrows represent division announcements)
Although both names have certainly come at a high level with the market, they are still well above where they split was announced. Apple investors are gearing up for the fall product cycle, which began with Tuesday’s iPad / Watch / Services bundle launch, while Tesla is just a week away from its investor meeting and battery day event. Both names have performed better in the market so far this year.
Now I bring these rallies because on Monday, we received news of another stock split. NextEra Energy (NEE) detailed a 4 for 1 division after the closure, an announcement that was combined with a business update that had raised guidance. Investors certainly like the news, with a new all-time high rising 4.9% on Tuesday.
However, investors need to be careful, as two of these three divisions have come up with another major action, which is an equity offering. Tesla waited until just after the completion of its split to sell for $ 5 billion, which it completed in just four days before being snapped up for the S&P 500, while NextEra announced a split right away. Days later announced an equity offer. Probably should have waited a few more days later to see if the shares went ahead, but that’s an argument for another day.
We are also in a crazy time in these markets, where the number of day traders has increased thanks to platforms like Robinhood. Buying any name fast in a short period of time on any news can make any name grow faster, and these steps can be extended if there are even bigger options to buy that force another round of equity purchases. We do. It’s getting to the point where traders think they can almost close the market, you know, like Winthorp and Valentine did in movie trading venues?
(Source: Google Images, seen here)
With very easy money from governments and central banks around the world, and extremely low interest rates, the promise of missing out on major gains has become a scare for many traders and investors. Social media, investment sites, and message boards are full of stories of people essentially gambling with retirement money and on the margins looking for these benefits. This is making the market more risky and definitely increasing volatility.
In my opinion, these three stocks reacted positively to their division and are more likely to trend forward. If you are a company that has bad news to announce, just split a share with it and see if investors will ignore the disappointment. On the other hand, if you are looking to raise equity, why not announce a split, watch your stock rise, and then hit the market with your high market cap to reduce dilution and limit interest (if you Some kind of loan deal well). While Stock Split News has worked so far in these instances, investors need to be careful, especially if it is because companies are about to move on after the sale and dilution of the stock to you.
Disclosure: I / We are long TECL. I wrote this article myself, and it expresses my own opinion. I am not getting compensation for this (other than Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosures: The authors currently have long-term TECLs, which have some risk for AAPL. Investors are always reminded that before making any investment, you should do your due diligence on any of the names mentioned directly or indirectly in this article. Investors should consider consulting a broker or financial advisor before making any investment decision. Any material in this article should be considered general information, and should not be relied upon as a formal investment recommendation.