Tesla, Apple stock splits pave way for more gains

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Stock splits at Apple and electric-car maker Tesla may spur further gains for both companies by making their shares more affordable — temporarily at least — to small investors.

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Stock in the iPhone-maker co-founded by Steve Jobs fell to $124.81 following its 4-for-1 split while Tesla’s stock dropped to $442.68 after a 5-for-1 split. Apple shares had previously risen 70% this year while Tesla's jumped 435%.

TickerSecurityLastChangeChange %
AAPLAPPLE INC.124.81-0.20-0.16%
TSLATESLA INC.442.68-5.07-1.13%

“It makes absolutely no economic sense that a split should cause a stock to rally, but it almost always does,” Matt Maley, Boston-based chief market strategist at Miller Tabak & Co., told FOX Business. “The general feeling is smaller investors can buy the stock.”

While a stock split doesn’t make a company any “cheaper” overall, since its market capitalization remains the same, it does give retail investors who couldn’t afford shares at previous prices a chance to buy at steep discounts.

The discounts don't last long, though: History shows that big-name brands typically see their share price rally soon after a split.

The 10 biggest global brands that have carried out a stock split over the past 60 years have seen their share price rise by an average of 33% over the next 12 months, according to data from London-based social trading and multi-asset brokerage company eToro.

While this is the first split in Tesla’s 10-year history as a publicly-traded company, Apple shares have split four times before, gaining an average of 10%, according to eToro data.

The Cupertino, California-based firm's shares saw a 58% boost in the 12 months following a February 2005 split but fell 61% in the wake of a June 2000 split, which occurred just before the dot-com bubble burst.

Stock split or not, mega-cap tech stocks look like they are going higher, according to Wedbush Securities analyst Dan Ives.

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"Tech stocks are at all-time highs and the strong are getting stronger,” Ives told FOX Business, adding that behemoths such as Facebook, Apple, Amazon, Google and Netflix may rally as much as 25% over the next six to nine months.

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