IT NewsBusiness ToolsFinance & Insurance
Nikolay Blinkov | 12.09.2020
Apple and Tesla are faced with a problem that often confronts companies with growing capitalization – in absolute value, enterprise shares become too expensive for
Therefore, Apple, along with Tesla, split the shares – it quadrupled the number of shares, that is, the holders received four new shares per share, and the securities were split. The company did the same.
Tesla, but only split stocks one in five.
Split is easiest to understand with an example. Let’s say one share is worth $ 400. After the split, the owner will receive four shares of $ 100 each. Thus, there will be more shares, but the total value will not change,
the number of shares in circulation is growing, but the capitalization remains unchanged. Dividends per share, however, are cut four times. Shareholders do not need to do anything;
of the securities they own occurs automatically.
Corporations typically split to make securities cheaper and more affordable for private investors. As a result, the announcement of the split and the split itself can lead to an increase in securities prices.
At Apple, the split was one to four, and at Tesla, it was one to five. Apple shares gained 7.5% after the split, while Tesla shares gained 12.6%.
Note that before the split, one Tesla share was worth $ 2,213.4. This is a significant amount, one security of Elon Musk’s company has become a serious acquisition. After the split, one Tesla share is already priced
at just $ 443, a much more affordable amount.
valuation of company shares