Easy 20% return? Shares of Tesla (NASDAQ:TSLA) are up another 7.5% premarket, adding to the 12.5% rally seen yesterday after the company split its stock 5-for-1.
Apple (NASDAQ:AAPL) shares are meanwhile ahead by 2.4% in early trade, following gains of 3.4% on Monday. A post-split purchase of 20 shares of Apple and 20 shares of Tesla before the run-up (for $11,360) would have netted nearly $2,000. Not bad for a day’s work.
The big gains didn’t start yesterday. Since announcing plans for the stock split on July 30, Apple has risen 34%, in the process becoming the first U.S. public company to surpass $2T. Tesla shares have surged 81% from the company’s Aug. 11 stock-split announcement and have more than quintupled this year.
Prior to the stock breakup, some were saying that splits are not impactful anymore as fractional shares are becoming widely available at brokerages and market caps essentially stay the same. Regardless of the rationality, that doesn’t seem to be the sentiment of the new trader, which has created frustration for the old guard.
“Look at Tesla and Apple: Everybody understands that [stock] splits don’t create value,” said Leon Cooperman, who founded Omega Advisors. “My dad once told me if you gave me five singles for a $5 bill, I’m no better off.”
In fact, the high trading volumes of the “Retail Bros.” appeared to take down popular brokerages like Robinhood and TD Ameritrade, with outages reported for many users at the market open on Monday.