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The New Coffee Room

  1. TNCR
  2. General Discussion
  3. Tesla stock splitting 5/1

Tesla stock splitting 5/1

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  • 89th8 Online
    89th8 Online
    89th
    wrote on last edited by 89th
    #1

    Split baby split! Effective 8/31/2020.

    1 Reply Last reply
    • HoraceH Offline
      HoraceH Offline
      Horace
      wrote on last edited by
      #2

      Do own any 89th?

      Education is extremely important.

      89th8 1 Reply Last reply
      • KlausK Offline
        KlausK Offline
        Klaus
        wrote on last edited by
        #3

        I don't quite get the commotion over stock splits. Except for the silly idiosyncratic definition of the Dow Jones, which takes absolute values and not market cap into account, stock splits shouldn't matter at all.

        1 Reply Last reply
        • HoraceH Offline
          HoraceH Offline
          Horace
          wrote on last edited by Horace
          #4

          they wouldn't in a perfectly rational market. But those don't exist.

          Education is extremely important.

          1 Reply Last reply
          • HoraceH Offline
            HoraceH Offline
            Horace
            wrote on last edited by Horace
            #5

            TDAmeritrade's trading software has updated aapl's price to reflect the post-split reduction. But they haven't yet updated the number of shares. Sad looking numbers right now.

            I guess TDAmeritrade has control over when to impose the share increase (as long as it's before open Monday) while the price decrease is handled by some other entity.

            Option strike prices haven't been converted yet either, I suppose that may be controlled by yet a third entity. Everybody has a deadline of market open tomorrow.

            Education is extremely important.

            1 Reply Last reply
            • jon-nycJ Online
              jon-nycJ Online
              jon-nyc
              wrote on last edited by
              #6

              Price comes from exchanges 'corporate actions' come from DTCC, not surprised they are slightly out of sync.

              Only non-witches get due process.

              • Cotton Mather, Salem Massachusetts, 1692
              1 Reply Last reply
              • jon-nycJ Online
                jon-nycJ Online
                jon-nyc
                wrote on last edited by
                #7

                @Klaus Even for the Dow it shouldn't matter as they adjust for splits.

                Only non-witches get due process.

                • Cotton Mather, Salem Massachusetts, 1692
                KlausK 1 Reply Last reply
                • jon-nycJ jon-nyc

                  @Klaus Even for the Dow it shouldn't matter as they adjust for splits.

                  KlausK Offline
                  KlausK Offline
                  Klaus
                  wrote on last edited by
                  #8

                  @jon-nyc Do they? I vaguely remember that the weight of a stock in the DJ is determined by the absolute value for one stock.

                  jon-nycJ 1 Reply Last reply
                  • KlausK Offline
                    KlausK Offline
                    Klaus
                    wrote on last edited by
                    #9

                    The value of the index is the sum of the stock prices of the companies included in the index, divided by a factor which is currently (as of June 2020) approximately 0.1458. The factor is changed whenever a constituent company undergoes a stock split so that the value of the index is unaffected by the stock split.

                    OK, so if a stock split occurs, the weight of the company in the DJ changes and all index funds etc. have to reshuffle their composition. Silly.

                    1 Reply Last reply
                    • jon-nycJ Online
                      jon-nycJ Online
                      jon-nyc
                      wrote on last edited by
                      #10

                      But they don't have to change their composition. The index change matches the split perfectly. So if you needed X shares of TSLA before the split, you'll need 5x after.

                      Only non-witches get due process.

                      • Cotton Mather, Salem Massachusetts, 1692
                      KlausK 1 Reply Last reply
                      • KlausK Klaus

                        @jon-nyc Do they? I vaguely remember that the weight of a stock in the DJ is determined by the absolute value for one stock.

                        jon-nycJ Online
                        jon-nycJ Online
                        jon-nyc
                        wrote on last edited by
                        #11

                        @Klaus said in Tesla stock splitting 5/1:

                        @jon-nyc Do they? I vaguely remember that the weight of a stock in the DJ is determined by the absolute value for one stock.

                        It is, but they adjust for splits.

                        Only non-witches get due process.

                        • Cotton Mather, Salem Massachusetts, 1692
                        1 Reply Last reply
                        • jon-nycJ jon-nyc

                          But they don't have to change their composition. The index change matches the split perfectly. So if you needed X shares of TSLA before the split, you'll need 5x after.

                          KlausK Offline
                          KlausK Offline
                          Klaus
                          wrote on last edited by
                          #12

                          @jon-nyc said in Tesla stock splitting 5/1:

                          But they don't have to change their composition. The index change matches the split perfectly. So if you needed X shares of TSLA before the split, you'll need 5x after.

                          Not if the index is computed as I quoted above (which is from Wikipedia).

                          If the stock prices are s1 to s30, then the index value is computed as
                          (s1+...+s30)/0.1458. Now if, say, s1 is split by two, then the factor is adjusted such that the split doesn't change the value of the index (that is, solve (0.5*s1 + s2 + ... + s30) / newFactor = (s1+...+s30)/0.1458 ), but still the weight of s1 is halved, so an index funds would have to sell half of it's s1 assets.

                          1 Reply Last reply
                          • HoraceH Horace

                            Do own any 89th?

                            89th8 Online
                            89th8 Online
                            89th
                            wrote on last edited by
                            #13

                            @Horace said in Tesla stock splitting 5/1:

                            Do own any 89th?

                            Yeah I bought 6 shares near the start of 2020, and am up about 190% since then. 🤷‍♂️

                            1 Reply Last reply
                            • HoraceH Offline
                              HoraceH Offline
                              Horace
                              wrote on last edited by
                              #14

                              Nice.

                              Education is extremely important.

                              1 Reply Last reply
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