Tesla stock splitting 5/1
-
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.
-
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.
-
@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.
-
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.
@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.
️