BREAKING NEWS : Police searching for missing 89-year-old Wabash County woman Full Story

Why it's time for Amazon and other quadruple-digit stocks to split

In June of 2010, Elon Musk was preparing to take Tesla public. Ten years later, Tesla has become the most valuable car company in the world. Here's what he told CNN about the future of the company on the day of Tesla's IPO.

Posted: Aug 18, 2020 10:31 PM
Updated: Aug 18, 2020 10:31 PM

Apple and Tesla are splitting their stocks to push the per-share price lower. Could Amazon, Chipotle or Netflix be next? Amazon and Chipotle both have quadruple digit stock prices while Netflix is trading near $500 a share.

The Apple and Tesla splits will soon make those stocks more affordable for average investors to purchase.

By completing a 4-for-1 split at the end of this month, Apple, which currently costs about $460 a share, will trade around $115. Tesla, now hovering around $1,875, will see its stock price fall to about $375 following its 5 for 1 split.

A stock split simply increases the number of shares outstanding, so neither company will actually lose value. An investor who held one Tesla share will soon own five, but the total value of their holdings stays the same.

Think of it like a pie. If you cut eight equally sized slices into sixteen and eat two, that's the same has having one bigger pre-cut piece.

Both Apple and Tesla stocks have surged since announcing the splits. That has investing experts wondering whether similarly high priced stocks — such as Amazon or Netflix — may soon split as well.

"If more super expensive companies follow with splits, the stocks could rocket even higher," said Daniel Betancourt, a moderator and writer with investing site OptionsSwing. "Logically, a stock split does nothing to change a company's value. But there's nothing logical about this market."

The case for more stock splits

Betancourt added that companies may want to lower their price to entice younger investors using apps like Robinhood. These mostly millennial and Gen Z traders may not be able to afford many shares of a company with a high stock price.

Amazon, for example, now trades for nearly $3,300 a share. The e-commerce and cloud giant hasn't split its stock price in 1999. One Netflix share costs almost $500. It last split in 2015.

Google owner Alphabet also has a high share price, trading at more than $1,500. The company announced a controversial stock split in 2012. Instead of simply cutting its price, Alphabet issued a new C class of shares with no voting rights. They trade with the ticker of GOOG.

But these are just a few of several well-known blue chip stocks in the S&P 500 that could be ripe for a split. Priceline owner Booking Holdings, Chipotle and AutoZone also have stock prices above $1,000.

Sherwin-Williams, BlackRock, Nvidia, Adobe, Domino's, Costco, Home Depot and Facebook all have triple-digit stock prices. All of them could be ripe for a split.

"Retail investors, after a long hiatus, are gradually coming back to stocks," said Michael Kelly, global head of multi-asset with PineBridge. "A stock split is custom made for individual investors. Institutional firms don't really care about the share price."

That's because many big mutual funds, hedge funds and pension funds focus more on valuation metrics like how a company is trading based on its expected earnings and sales growth potential as opposed to the share price.

"Individual investors are paying more attention to the stock price and not the earnings. That's not long-term investing," Betancourt said.

No reason to split if investors keep buying?

Still, not everyone is convinced that other high-priced companies are going to rush to split their stocks.

While it's true that it may be hard to afford one share of Amazon, Robinhood and many other online brokers have launched so-called fractional trading plans that let people buy just a small portion of an individual share.

Many investors are also buying passive index ETFs, which provide exposure to the high-priced FAANG stocks without having to purchase individual shares of the companies themselves. That trend is likely to continue.

"The proliferation of zero-fee online trading and fractional share ownership have largely rendered irrelevant the dollar value of a company's share price," said Julian Emanuel, BTIG chief equity and derivatives strategist.

After all, it's not as if the high prices for one share have scared off that many investors lately. Amazon is up nearly 80% this year. Apple has surged more than 55%. Chipotle has skyrocketed 45%.

And then there's Tesla. The stock has soared more than 350% in 2020 — despite its hefty price tag of nearly $1,900 for one share.

"There are more choices an investor has besides buying a single stock these days," said Lindsey Bell, chief investment strategist with Ally Invest, in a recent report about stock splits. She added that "high-priced stocks have also become somewhat of a badge of honor these days."

Indiana Coronavirus Cases

Data is updated nightly.

Cases: 918230

Reported Deaths: 15011
CountyCasesDeaths
Marion1252491952
Lake623371084
Allen52301746
Hamilton43009443
St. Joseph41155584
Elkhart32831485
Vanderburgh29698436
Tippecanoe26442247
Johnson23106414
Hendricks21708338
Porter21255340
Clark16988222
Madison16899378
Vigo15562272
Monroe14186190
LaPorte13961235
Delaware13613215
Howard13531258
Kosciusko11150134
Hancock10534159
Warrick10431174
Bartholomew10233166
Floyd10099202
Wayne9557216
Grant8858194
Morgan8654158
Boone8231109
Dubois7521123
Henry7391126
Dearborn734186
Noble7208100
Marshall7168127
Cass7060117
Lawrence6803150
Jackson638980
Shelby6386106
Gibson5999105
Harrison587984
Huntington586490
Montgomery5663101
DeKalb555691
Knox532999
Miami523183
Clinton522464
Putnam519067
Whitley509851
Steuben480267
Wabash470192
Jasper465760
Jefferson456091
Ripley439074
Adams435565
Daviess4008106
Scott389563
White383457
Decatur376895
Clay376455
Greene375589
Wells375183
Fayette363074
Posey351841
Jennings341756
Washington324046
LaGrange312074
Spencer310734
Fountain306553
Randolph302087
Sullivan294947
Owen275961
Orange269659
Starke268961
Fulton264451
Jay248134
Perry244950
Carroll239926
Franklin229337
Vermillion225850
Rush225530
Parke212020
Tipton205354
Pike200938
Blackford163834
Pulaski155250
Crawford140818
Benton138316
Newton138141
Brown130646
Martin124416
Switzerland122310
Warren112616
Union92211
Ohio75811
Unassigned0461

Ohio Coronavirus Cases

Data is updated nightly.

Cases: 1319265

Reported Deaths: 21265
CountyCasesDeaths
Franklin1480641537
Cuyahoga1311202313
Hamilton948871307
Montgomery647451122
Summit548531041
Lucas49502853
Butler45993649
Stark39954963
Lorain30438525
Warren29170326
Mahoning25988629
Clermont24726278
Lake24088411
Delaware21722140
Licking19822239
Fairfield19780218
Greene19671266
Medina19208285
Trumbull19195506
Clark17188321
Portage15585224
Richland15540228
Wood15187208
Allen13654254
Miami13283244
Muskingum11821148
Wayne11448234
Columbiana11100239
Tuscarawas10388264
Marion10273144
Pickaway10162128
Scioto9766124
Erie9479170
Ross8979172
Lawrence8225116
Hancock8105140
Ashtabula8083184
Geauga7976155
Belmont7791183
Jefferson7093168
Huron7087125
Union703549
Washington6823116
Athens666163
Sandusky6608132
Darke6394135
Knox6308120
Seneca6113135
Auglaize569888
Ashland5631110
Shelby555799
Mercer545188
Brown533067
Defiance5278100
Madison527368
Crawford5148113
Highland514876
Fulton508781
Clinton505379
Logan494582
Preble4788110
Putnam4733106
Guernsey439057
Williams437281
Champaign426463
Ottawa425783
Perry414051
Jackson402259
Pike367140
Morrow359149
Fayette353951
Coshocton345064
Hardin341868
Adams338864
Gallia329254
Holmes3148107
Henry312668
Van Wert299269
Hocking280467
Wyandot271858
Carroll250451
Paulding231742
Meigs197842
Monroe178649
Noble160340
Morgan153528
Harrison145740
Vinton130217
Unassigned05
Fort Wayne
Clear
81° wxIcon
Hi: 82° Lo: 54°
Feels Like: 80°
Angola
Clear
79° wxIcon
Hi: 82° Lo: 55°
Feels Like: 79°
Huntington
Clear
80° wxIcon
Hi: 81° Lo: 52°
Feels Like: 80°
Decatur
Clear
81° wxIcon
Hi: 82° Lo: 53°
Feels Like: 80°
Van Wert
Partly Cloudy
82° wxIcon
Hi: 84° Lo: 52°
Feels Like: 82°
Friday is the beginning for a more summer-like forecast, with more heat and humidity returning to the region.
WFFT Radar
WFFT Temperatures
WFFT National

Community Events