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4 things that have learned from the Apple / Tesla stock split

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4 things that have learned from the Apple / Tesla stock split

This is a historic year for Wall Street. In no particular order, we observed:

  • Fastest bear market decline since record highs in history (34% decline in S&P 500 after 33 calendar days).
  • The largest sharp rally in stock market history as the S&P 500 recovered from a bearish market low in less than five months.
  • Short period of negative oil prices West Texas Intermediate.
  • an Apple (NASDAQ: AAPL) become the first American company to surpass the $ 2 trillion valuation.

And at the end of August, we added another first to the list: the electric vehicle (EV) manufacturer. Teslafrom (NASDAQ: TSLA) the first split of shares

Image source: Getty Images.

In fact, over the past month, no story has garnered more attention from the investment community than those of Apple and Tesla. corresponding share split of 4 to 1 and 5 to 1which were adopted prior to the market opening on Monday 31 August. This could be due to the fact that Apple and Tesla have increased market value by $ 653 and 187 billion, respectively, since the announcement of the share split.

While the split has absolutely no effect on the market capitalization or fundamentals of the company – i.e. it is purely cosmetic in nature and is intended to increase or decrease the value of the company’s stock and shares in circulation – you certainly don’t know this by looking at Apple stock and Tesla. last performance.

Now that these cracks are reflected in the rearview mirror, here are four important takeaways that could affect whether other high-profile stocks follow suit.

1. Splitting stocks creates a strong perception of value

The first lesson we learned from these two stock splits is how important investor perception can be.

For example, if you have one Tesla share at $ 2,000 or five shares at $ 400, your total value will be the same. But from a psychological point of view, it is much easier for an investor to come to terms with buying additional Tesla shares at $ 400 than buying one share at $ 2,000. It is also easier for an investor to raise $ 400 of free cash than to raise $ 2,000 to buy a stock.

Equity investment helped to overcome the overpricing bias. However, not all brokerage companies allow their users to buy fractional stocks, including TD Ameritrade, E * Trade, and Vanguard. This makes it much easier for millions of retail investors to add Apple or Tesla to their portfolio.

Apple Store employees fix Apple Watch straps at the show.

Image source: Apple.

2. Having a brand matters.

It may be a matter of course, but being a branded company really helps when it comes to splitting stocks. Apple and Tesla the two most recognizable brands in the States… Many consumers across the country have formed emotional attachments to one or both of these brands.

Other public companies that carried out a forward share split in August received little support. For example, an integrated circuit (IC) manufacturer Power integrations announced a 2-by-1 stock split on July 30, the same day Apple announced a 4-to-1 stock split. However, Power Integrations shares have dropped nearly 10% since the split was announced. This is because it is a relatively unknown company that does not have a direct consumer presence. It supplies its ICs and electrical components to original equipment manufacturers.

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Without a brand name, a split usually does not occur.

The applause of a young businesswoman in front of a volatile but growing chart.

Image source: Getty Images.

3. Retail investors are almost certainly pushing Apple and Tesla to grow.

We also learned that retail investors were likely the driving force behind the hype and subsequent growth at both companies.

How do we know this? Just over three weeks ago, wealth managers with more than $ 100 million in assets were required to file Form 13F with the Securities and Exchange Commission. These forms give you an overview of what the smartest money managers have been up to in the last quarter. As for Apple, financial managers headed for the exit… The total number of shares held by 13F bidders is down nearly 140 million (5.2%) from the first quarter. As for Tesla, the number of shares held by the 13F applicants did increase, but only by about 2 million shares (2%).

It is clear that there are flaws in the 13F docs. Namely, we are looking at information that is more than two months old today. Big money may have played a role in the spike in Apple and Tesla stock prices, which is not yet known or reflected in these SEC documents. But that 13F data suggests retail investors are behind the rising valuations of Apple and Tesla.

A visibly disappointed stock trader stares at his computer screen.

Image source: Getty Images.

4. The market can remain irrational longer than you can remain solvent.

Last but not least, we were reminded that the irrational behavior of the stock market or individual capital can have persistence.

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Tesla, for example, was called himself too expensive his own CEO, Elon Musk, May 1. Tesla’s price adjusted for the split was $ 140 that day. In four months, Tesla shares have more than tripled from Musk’s personal valuation statement, which belies my own repeated arguments that The company is prized for excellence… Tesla did not cost more than auto drains Toyota, Honda, Daimler, Ford, General Motors, Vwand Ferrari put together, although Tesla only produces about 500,000 EVs a year. Emotional investing is driving this short-term rally.

The same can be said for Apple, which is now valued at about 35 times its projected earnings. Apple’s projected earnings have fluctuated 10 to 20 times over the past decade. It was suddenly appreciated as a service company, despite the fact that its fast-growing service segment accounted for only 19% of its sales in the first nine months of fiscal 2020.

None of the ratings make sensebut both could climb higher.

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Economy

TUGA offers new electric vehicles in three segments: from sports to trucks – Computers

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TUGA offers new electric vehicles in three segments: from sports to trucks - Computers

Based in Vancouver, Canada but co-founded by Portuguese Cesar Barbosa, TUGA Innovations is developing solutions for urban mobility. AT February showed its first working prototype of the TUGA electric car, but has now revealed its plans to develop a whole family of urban mobility solutions.whether for use by independent consumers or for operators with a fleet of commercial models.

The company says that based on market research, it has decided to change its strategy, highlighting TUGA Innovations’ ability to easily transform the functional design aspects of its base model. So it’s over several predefined vehicle configurations which, although sharing a few common design featurestarget different uses and customer needs, whether it is a focus on mobility, services or utilities.

TUGA Innovations offers three vehicle categories as well as proprietary component options such as retractable rear axle or retractable landing gear, which the company later says will be segmented to suit different market sectors..

See the various TUGA models in the gallery:

The first category is dedicated limited-edition high-performance cars that can transformsuch as removing the front windshield and rear bin to create the look of a roadster. They fit the TUGA Thunder and TUGA Falcon models.

The second group of vehicles includes TUGA Commuter and TUGA Deliver, which, in fact, are demonstration models of the manufacturer. They allow you to swap body parts that have now been redone with more safety components added.. Vehicles can also be purchased in a package called Mobility as a Service (MaaS) for functional integration into delivery fleets as well as daily commuting.

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Finally, the TUGA Cargo and TUGA Pickup models. expand your chassis to meet the needs of urban micrologistics. The vehicles have a capacity of 600 liters of cargo space in an 88 cm long model, combined with an extended 128 cm rear axle for added stability.

See prototype images in the gallery:

Regardless of category, the startup claims its entire family of vehicles has been designed to make transit and parking easier.. The retractable axle improves stability at high speeds, and the retractable chassis allows passengers to easily get inside the vehicle.

According to Cesar Barbosa, his startup creates not just a vehicle, but a solution to the problems of urban mobility. The project manager adds that since the presentation of the prototype, the family has expanded to offer different products and other features of its electric vehicles..

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Economy

Gas. Bottle sellers adjust prices

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Gás. Vendedores de garrafas corrigem preços

















Gas bottle sellers have adjusted prices that are not in line with government regulations limiting those values, said the National Energy Sector Organization (ENSE), which returned yesterday to review activity.

After conducting the first inspection on Tuesday, which found “high non-compliance” in 23.4% of outlets, the organization again carried out “108 inspection actions in Castelo Branco, Portalegre, Santarem, Evora and, in the municipalities of Cascais, Oeiras and Sintra in the Lisbon area, focusing on petrol stations, hypermarkets/supermarkets and other retail outlets.”

During this second check, ENSE found “seven violations (corresponding to 6.5% of the actions taken) in the selling prices (from 0.36 euros to 3.39 euros for T3 bottles and 6.92 euros for T5 bottles) of this type of product.” But he left a guarantee: “Of these actions, it was established mainly the correction of inappropriate prices, namely in relation to inflated amounts charged in several hypermarkets of the same brand.”

The maximum prices per bottle of liquefied petroleum gas (LPG) set by the government came into effect on Tuesday, saving almost 3.2 euros on a 13 kilograms (kg) bottle of butane.



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Economy

FRS minutes Press end of the session. Wall Street closes in the red – stock exchange

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FRS minutes Press end of the session.  Wall Street closes in the red - stock exchange

The session on Wall Street ended the same way it began: in the red. Closing of the day was marked by the publication of the minutes of the last meeting of the Federal Reserve System (FRS) of the United States, and technology fell most of all.

The Dow Jones Industrials fell 0.50% to 33,980.32 and the S&P 500 fell 0.72% to 4,274.04. For its part, the Nasdaq Composite Technology Index fell 1.25% to 12,938.12.

The Fed said in the minutes that it fears high inflation will take root in the US economy if the market begins to factor in a slower pace of US interest rate hikes. “Participants [no encontro] considers that there is a significant risk for the committee that high inflation could take root if the public begins to doubt that the committee will sufficiently adjust its political position, ”the minutes say.

The market has balanced, on the one hand, the likelihood that inflation has already peaked after the fall in the consumer price index in July, as well as the good results of companies in the “reporting season”.

According to Bloomberg, four out of five reporting companies achieved the expected results or even exceeded analysts’ estimates.

On the other hand, investor sentiment is under pressure from the fact that the US has entered a technical recession, as well as the prospect of further tightening of the Fed’s monetary policy, which could further worsen this scenario.

During this session, in addition to these concerns and good news, investors continued to digest data on US retail sales, which rose 0.7% higher than expected.

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Among the major market moves, shares of Target stood out, which fell 2.66% after the retailer reported results below analysts’ expectations.

Lowe’s, by contrast, rose 0.54% after the building materials retailer released last quarter results that beat analysts’ forecasts.

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