Apple, Tesla Shares Keep Rising After Stock Splits - The Wall Street Journal

Apple was the first U.S. public company to reach a $2 trillion market value. Shoppers... — Apple was the first U.S. public company to reach a $2 trillion market value. Shoppers wait outside a Brooklyn, N.Y., Apple store on June 22, 2020.
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Aug. 31, 2020 3:04 pm ET

Apple Inc. AAPL 3.36% and Tesla Inc. TSLA 12.57% shares rose to new heights Monday after their stock splits took effect, extending their meteoric rallies this year.

Apple added 4.2% to $130.07 after the tech giant’s shares began trading following a 4-for-1 split, essentially giving investors three more shares for every one they owned. Tesla shares jumped 9.5% to $484.80 after the electric-vehicle maker’s 5-for-1 split. Both stocks are on course to close at records.

Since announcing plans for the stock split on July 30, Apple has risen 35%, in the process becoming the first U.S. public company to surpass $2 trillion in market value and extending its gains for the year to 78%. Tesla shares, meanwhile, have surged 77% from the company’s Aug. 11 stock-split announcement and have more than quintupled this year.

The companies have said the splits are intended to make their shares more accessible to a wider base of investors. Stock splits leave the market values of companies unchanged but lower the price tags of individual shares.

Some investors monitoring their accounts over the weekend, though, may have seen positions that looked like even bigger winners.

Investors on Twitter said the websites of money managers Vanguard and Fidelity Investments briefly showed their assets were vastly inflated. In some cases, the platforms had increased the share counts without reducing the share prices.

“The stock splits—and associated increase in number of shares—went into effect after market close on Friday,” Vanguard spokesman Charles Kurtz said in an email. “The new split-adjusted prices went into effect before markets opened this morning. In between, clients may have temporarily seen inflated position values as a result of their new number of shares but pre-split prices.”

Vanguard brokerage account clients who own Apple and Tesla shares were alerted when logging into their accounts that they would see larger positions than they actually held, Mr. Kurtz said. He said trading was disabled for both stocks from the close of business Friday to when the price adjustments took effect Monday.

A representative from Fidelity didn’t immediately respond to a request for comment.

Also Monday, three new components joined the Dow Jones Industrial Average in conjunction with Apple’s stock split. Salesforce.com Inc., Amgen Inc. and Honeywell International Inc. replaced Exxon Mobil Corp., Pfizer Inc. and Raytheon Technologies Corp.

Shares of five of those six companies ticked lower on the day, as did most stocks in the average, while Amgen hovered around the flatline. Since the shake-up was announced last week, shares of the new additions have gained ground, led by Salesforce with a jump of 29%. The former members have slipped, with Exxon down 5.3% and Pfizer down 2.9%.

To prevent the substitution of Dow members or the split of a member’s stock from jolting the overall index level, such changes are accompanied by an adjustment to the divisor used to calculate the average.

A $1 rise in the price of any stock in the Dow Jones Industrial Average now adds 6.58 points to the benchmark as a whole, the lowest multiplying effect since March 18, 2015, according to Dow Jones Market Data. Last week, a $1 change in a member’s stock price corresponded to a 6.86-point change in the benchmark.