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TSLA Stock Split - Would it be Prudent?

Discussion in 'TSLA Investor Discussions' started by Cattledog, Jun 30, 2013.

  1. Cattledog

    Cattledog Active Member

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    To the smarter investments folks out there, what would you weigh as the pros/cons of a TSLA stock split at some point in the future? There are some companies that eschew the Google/Apple/Berkshire Hathaway high per share price and split their stock. Would that make sense for Tesla as the share price (hopefully) appreciates? Would it change the short interest dynamic? How do you imagine the market would react? Curious, thanks.
     
  2. sleepyhead

    sleepyhead Active Member

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    The reason companies used to do stock splits is because you had to buy shares in round lots (100). In order to get the retail investor to afford to buy the stock, they did splits. Nowadays you can buy one share if you wish. But you still have to short in round lots of 100.

    So you are only helping short sellers by doing a stock split. It does not make any sense at all.
     
  3. Causalien

    Causalien Reaper of Trolls

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    In the current modern market. Both the vanilla stock split and the new invention reverse stock split are all weapons of mass suicide. I have not seen any split so far being good for the stock price in a 5 year time frame and even if the stock do recover past its pre-split price, it is often due to other conditions. There is no need to do a split math wise. Psychologically, it only shows that your hands are weak.
     
  4. Citizen-T

    Citizen-T Active Member

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    Splits are so last decade.
     
  5. sleepyhead

    sleepyhead Active Member

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    Actually there is one benefit to doing a reverse stock split. E.g. if you are listed on NASDAQ and your stock price falls below $1 for 180 days then you may get de-listed. A simple reverse split solves this problem.
     
  6. Cattledog

    Cattledog Active Member

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    I bought Citigroup @$3 and then it reverse split to $30 at 1:10. I believe part of it was psychological, part was some mutual fund companies regulate the minimum per share price their funds are allowed to buy ($5 is common, I think), and some of it had to do with other financial stuff like wanting to declare a 1 cent/share dividend when allowed.

    This doesn't really apply here, obviously, just wondering if the opposite would have merit for Tesla, who happens to roll contrarian in many aspects.


     
  7. mershaw2001

    mershaw2001 Member

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    I've been shorting stocks in less than 100 share lots, not sure why you think that you are limited to shorting in 100 share lots.
     
  8. sleepyhead

    sleepyhead Active Member

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    I guess that the broker I used required that you short in round lots of 100. This was a few years ago, so things might have changed, but some brokers do/did require that you short in round lots.
     
  9. RoyP

    RoyP Member

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    I think when all the short covering is done and gen III is out, possibly a split. But again, it is not necessary.
     
  10. toastypasta

    toastypasta Member

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    Stupid thread. No reason to ever split.
    I feel like this pops up every few weeks.
     
  11. Robert.Boston

    Robert.Boston Model S VIN P01536

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    AAPL didn't split, even when its price was >$700, and clearly there was no repercussion. The only place this matters is with options, which are always in blocks of 100. OTOH, anyone using the options market shouldn't be concerned by that block size until TSLA overtops ~$1000.
     
  12. Cattledog

    Cattledog Active Member

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    Ouch. I thought there were no stupid questions. Just asking because I am not an investment professional and curious what some people thought, knowing that some here are. I hadn't seen it recently with the appreciated price so I thought I'd ask.
     
  13. MikeC

    MikeC Active Member

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    I think it's a fair question. I think it might pick up a few more retail investors. I have friends (who I told to buy when it was at $30) who I think might be dumb enough to buy it at $60 after a split but not at $120.
     
  14. Theshadows

    Theshadows Active Member

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    Apple actually split 2 for 1 three times. They would have peaked at $5600+ per share

    Apple Inc. - Frequently Asked Questions
     
  15. v12 to 12v

    v12 to 12v Active Member

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    I like splits. It gives you more flexibility.
     
  16. toastypasta

    toastypasta Member

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    Sorry about that one. It's a fair question i just feel like it gets brought up at least once a month and the same people give the same answers that are all correct. No matter the price of the stock the retail investor can gain access to the company by buying less shares or options. Plus with so much demand for the stock right now splitting is not the answer. Doesn't bring any benefit to the company unless they use it to buy back shares.

     
  17. Sunnyday

    Sunnyday Member

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    It's a fair question. Psychology drives stock prices. I think most retail investors appreciate stock splits, even though their percentage ownership doesn't change. I'm all for a 2:1 split. If it gives more investors the psychological satisfaction of owning whatever round lot number suits their fancy, then great. The more investors with a stake in TSLA's future, the better. As an extreme example, look at Berkshire Hathaway at $175,000 per share. BRK-A: Summary for Berkshire Hathaway Inc. Common - Yahoo! Finance The stock has done great, but most investors that can't afford a single share. Same thing with Google at $923 - GOOG: Summary for Google Inc.- Yahoo! Finance If you only have $500 to invest, you're out of luck.
     
  18. brianman

    brianman Burrito Founder

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    Generally agree. Specifically, too soon (for Tesla) IMO.

    - - - Updated - - -

    Incorrect. As noted, the block size for options is 100. I can play the options market with $5,000 on a stock at $50 but not with a stock at $100. This exact case came into play for me on the day of the swapping announcement. I bought stock directly instead of making an options play with my $5,000.

    So there's a case in point that actually happened to me personally where a split changes my available choices.

    Again, I don't think it's time for Tesla to consider one but saying there is no investor impact is incorrect.
     

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