In today’s post, I am going to talk about these 2 stocks that people are going to be buying soon. I highly suggest that you at least send this article to friends because no one is going to want to miss this opportunity! In my next couple of post I will show you my call/put options that I have been making these past 2 months.
Quick Crash Course
A stock split in simple terms happens to increase the number of shares in a company. Another benefit to doing this is it also gives more low money investors and beginners a chance to buy stock at an affordable rate.
Yes, Elon is deciding to do a 5 to 1 stock split which got approved by everyone on the board. On the Tesla website, It states,
Tesla, Inc. (“Tesla”) announced today that the Board of Directors has approved and declared a five-for-one split of Tesla’s common stock in the form of a stock dividend to make stock ownership more accessible to employees and investors. Each stockholder of record on August 21, 2020 will receive a dividend of four additional shares of common stock for each then-held share, to be distributed after close of trading on August 28, 2020. Trading will begin on a stock split-adjusted basis on August 31, 2020.https://ir.tesla.com/news-releases/news-release-details/tesla-announces-five-one-stock-split#:~:text=Each%20stockholder%20of%20record%20on,basis%20on%20August%2031%2C%202020%20.
How low will tesla stock drop following the stock split? In many estimates, people are predicting the price to be around $300. It is currently trading around $1,900. I think that Tesla dropping to the 3’s is literally a steal that everyone should buy.
Though if you’re wondering about buying the stock right, some think that it is a smart move (even though its a lot of money for most people). On reddit a person asked this same question and got a response that stated,
Before the split is probably best. There will probably be a 15-20% run up to when the split occurs. Might be some sell off at that point but it depends a lot on when they get included in s&p500. I think most people assume inclusion before the end of the month but it could be anytime really since it’s a committee making the decision so no guarantees. If it doesn’t comes this month it will be sometime in the near future. I think with battery day coming up next month now is your best bet.
For me, I am going to buy 1 or 2 shares, but try to load up on call options that are hopefully cheap. If you don’t have the money to buy full shares then consider buying fractional shares with Robinhood or whoever accepts it
Apple is the next stock that a lot of people are going to be able to afford. They were the first ones to announce a 4 to 1 stock split (fifth time doing it) which will happen around the same time as Tesla. The price per stock is trailing above $400 and after the split it will be buyable at $100.
To further understand a stock split, Apple’s website under investor relations gave a good example that I will provide below..
Here’s an example: Let’s assume that as of the Record Date (August 24, 2020) an investor owns 100 shares of Apple common stock and that the market price of Apple stock is $400 per share, so that the investment in Apple is worth $40,000. Let’s also assume that Apple’s stock price doesn’t move up or down between the Record Date and the time the split actually takes place. Immediately after the split, the investor would own 400 shares of Apple stock, but the market price would be $100 per share instead of $400 per share. The investor’s total investment value in Apple would remain the same at $40,000 until the stock price moves up or down.https://investor.apple.com/faq/default.aspx
I as well will be buying Apple stocks with more shares than Tesla (because I don’t have money to buy) and will be looking out for cheap call options that will have good premiums down the road.
I honestly think that this is a great time for any new investors to buy these big company stocks. Apple pays dividends and Tesla is one of those companies that are super innovative (in terms of making clean energy the way to go).
Thanks for supporting The Finance Starter and don’t forget to send this post to a friend that will 100% benefit from the reading!! Check out other post that I have written below..
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