- Upcoming TSLA and AAPL stock split
- How positions will be affected?
- Important implications of the TSLA and AAPL Stock Split
- What is a stock split?
- Why do stocks split?
- What is the split ratio?
- What will this split mean to investors?
- Does the stock split mean the value of my shares will increase?
- How do stock splits affect short sellers?
Upcoming TSLA and AAPL stock split
Apple Inc. and Tesla, Inc. announced that their Board of Directors approved a stock split, effective from Monday, August 31, 2020.
Each Apple shareholder will receive three additional shares for every share held, and each Tesla shareholder will receive a dividend of four additional shares of common stock for each then-held share.
Both Apple shares and Tesla shares will begin trading on a split-adjusted basis on August 31, 2020.
Please be advised of the upcoming Tesla, Inc. (TSLA) 1st stock split and Apple Inc. (AAPL) 5th stock split that are going to take place as per the following schedule.
- Tesla, Inc. (TSLA) 1st stock split
- Ex-Date: Aug 31st, 2020.
- Apple Inc. (AAPL) 5th stock split
- Ex-Date: Aug 31st, 2020.
Common shares will trade at the new split-adjusted price.
How positions will be affected?
As per recent announcements from The Board of Directors of each, both Apple & Tesla have upcoming stock splits taking place as per the below details:
- Apple: 4-for-1 Stock split
- Tesla: 5-for-1 Stock split
Client A has bought 1 share of Apple before the split:
- Open price 1 share 450.00
- Current price 455.00
- Current profit 455.00 – 450.00 * 1 = $5
Before market open on the 31st the position will be adjusted as per the below:
- Open price 4 shares 112.50
- Upon open market should price 113.75
- Current profit 113.75 – 112.50 * 4 = $5
Both Stocks will be available on a stock-split adjusted basis from Monday 31st August.
Important implications of the TSLA Stock Split
- The quantity of shares of each client’s position will multiply by five.
- Post-split, the open price of each position will be adjusted, which will be the original price divided by five and four.
- The estimated post-split price will be 1/5th of the closing price on 28th of August.
- All pending orders at the time of the split (Buy Limit, Sell Limit, Buy Stop, Sell Stop, Buy Stop Limit and Sell Stop Limit) will be deleted.
What is a stock split?
A stock split is a corporate action taken by companies that have seen their share price increase to levels that are either too high or are beyond the price levels of similar companies in their sector, to divide their existing shares into two or more shares.
Why do stocks split?
The primary motive is to make the shares more affordable to small investors even though the underlying value of the company has not changed.
Therefore, after bringing in a record Q2 and Q3 revenue, Tesla would like its stock to be more accessible to a broader base of investors.
What is the split ratio?
Tesla announced it will split its stock in a 5-to-1 offering.
Apple also announced it will split its stock in a 4-to-1 offering.
What will this split mean to investors?
Each share of Tesla stock that an investor owns before Ex-Date (Aug 31st, 2020) will be eligible for stock split.
Investors will receive four additional shares and the stock price will be one-fifth.
Each share of Apple stock that an investor owns before Ex-Date (Aug 31st, 2020) will be eligible for stock split.
Investors will receive three additional shares and the stock price will be quartered.
Stop Loss and Take Profit set on all open position will be DELETED.
Here is an example:
If an investor owns 100 shares and the market price is $1600, after 5 for 1 stock split, the investor will own 100*5= 500 shares and the estimated post-split price would be $1600/5 = $320.
All pending orders (Buy Limit, Sell Limit, Buy Stop, Sell Stop, Buy Stop Limit, Sell Stop Limit) will be DELETED.
Does the stock split mean the value of my shares will increase four and five times?
As stated in the above example, the increase in the number of stocks means every share is now worth less than its previous value, precisely, it’ll be 1/5th or 1/4th the previous value.
How do stock splits affect short sellers?
Stock splits do not affect short sellers in a material way.
There are some changes that occur as a result of a split that affects the short position, but they don’t affect the value of the short position(s).
If you have any questions about any of these changes, please contact VantageFX’s Client Service team.
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