Previously in my video where I talked about my portfolio and Tesla video, I mentioned that I bought one Tesla stock at about USD 989 and on 31 Aug 2020 there was a 5 for 1 split. I was rather excited about it because it is my first time having a stock split and it really drove the stock up in the past few days.
So I bought my Tesla stock through FSMone and you can see the WAC and price as of 28 Aug 2020 before the stock split. So the next image is after the stock split and now I have 5 shares of Tesla and I also added 3 more stocks of Tesla at a price of about $445. So right now my weighted average cost is about $219.
So will I be buying more Tesla shares, definitely, I do see a lot of potential in the company and also it’s innovation in EV although definitely a lot of other car makers are also in it. As the leader in EV, it definitely has a head start and a lot will determine on it’s innovation, discovery and research and development. With battery day coming soon it will also be interesting to watch Tesla. Elon Musk is also the person to watch as he leads all product design, engineering and global manufacturing of the company's electric vehicles, battery products and solar energy products.
As sexy as it sounds, stock splits generally are super positive on the stock although there are no changes to the value of the stock as with many explanations, it is like you having a $2500 bill and I exchange it with you for 5 $400 bill.
This definitely makes the stock look more attractive as it is at a lower price and if you feel that the company does have a huge potential then you will surely buy it at a cost of $400 where if it is at $2500, you might hesitate as it is a huge number to begin with. The intention behind a stock split is to enhance liquidity and to make the shares more affordable.
For example, Apple's stock has split four times since the company went public. Had Apple never split its stock, shares would currently sell for roughly $28,000 apiece. Meaning that after it’s every stock split, Apple went back up again and fundamentally, if you believe that the company is going to continue to deliver results then it is good to purchase more but definitely think twice and also make sure you have the basics right like holding power and an emergency fund on the side.
US stocks has recently seen a drop particularly in tech stocks. Some say it is a correction and some say it is going to continue to drop. Whatever the case, my ETF RSP will buy VOO and VT monthly. With no extra cash on hand currently, I don't think I will be buying in anything else but will continue to hold my units. Very exciting times ahead and no one really knows what is going to happen.
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