Guidance should be out soon and it might change things a bit but so far, the stock barely moves (compared to past earning reports) even with stock split + dividend increase. This looks rather bearish.
Not a comment about the stock price increase due to splits, but very high stock prices are an issue for employee stock purchase plans (ESPP): they can't offer fractional shares and they need to round down.
If you set aside 15% of a gross salary of $100k for 6 months, that's $7500. When the stock is at $1000, you get 7 shares. If the stock is $100, you get 75 shares. The lower your income, the more you miss out on ESPP that way.
It's not a huge deal if the stock is flat (you only get a 15% discount), but for a fast appreciating stock, those additional 5 shares can be real money.
Thanks for your pedantic contribution. I obviously mean you can’t buy them on a small account. You can by a fraction of an NVDA share with $200 but you can’t buy a call option
Yep. It is really hard to trade options even for hedging when the notional is so high. Of course you can do combinations of strategies to lower the upfront but I imagine many brokers might just not give the credit worthiness or permissions for that.
Don’t know why your were downvoted. Unless I miss something obvious, as well.
I think it mostly just opens the door to retail investors with a smaller account. The announcement of a stock split by itself create that expectation and drives the price up.
One of the primary reasons companies split their stock is to keep the price in a more natural trading range where there's likely to be more liquidity.
An n-way stock split in theory should reduce the price by a factor of n (that is, a 2:1 split ought to halve the price) but what we're seeing now is likely just price discovery based on the bullish earnings report.
That's about the only 'rational' explanation I can think of - but I suspect that's really small money overall - it's not people who can only afford to buy 50$ that will drive up the price ?
Or maybe the actual number is x10 - since we don't want to buy just 1 share, and the real minimum is 10 shares ?
Remember this McDonald's billboard saying "Hey Crypto Bros, we're hiring"? :)
Many individual investors are people who only have like 100-200 USD per month to invest through Robinhood. Or they do have some 401k plan where they get like $400 monthly.
The underlying mechanism is that supply (of stocks) will decrease.
The boost in prize is an anticipation of the result.
In poor economic theory, there shouldn't be any change, but if you consider behavioral economics, and regulations that introduct inefficiencies it explains the change in price.
It also communicates to investors (through action) the plan, apetite for risk, and investment opportunities (for the company) moving forward.
Premature to say what? It's an observation based on past earning reports that preceded earning calls.
Even the peak 7% post earnings call (now 5.7% and probably a different number by the time I hit "reply") is a relatively small move compared to past 4 quarters and that's without even taking the stock split + dividend increase into account.
Sure, tomorrow it can get to 15% but all I can compare it with right now is the past price action post earnings.
Exactly, which makes it the smallest post earnings price action in the past 4 quarters (last one was also smaller than the 4 that preceded it iirc). And today was the only one that had stock split. It'd have probably been even less than 5.5% if it wasn't for that.
Not saying it's not going to beat the market in years to come but it is slowing.
Of course, all earning reports occurs outside trading hours. In the past though, most of the price action following earnings happened in after hours trading. Again, it might change after conference call but that's just the way it's been in the past quarters at least.
