Gartman: Tesla stock surge reminds me of dot-com era’s now defunct businesses
Dennis Gartman of the University of Akron Endowment Investment Committee on Tesla and Apple stocks, the price of gold and his investing tips ahead of the presidential election.
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.
Continue Reading Below
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%.
“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.