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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 + divid

by almog 2y ago

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.

TheAlchemist 2y ago
Dividend yield is 0.02% - the increase is meaningless anyway. It's quite amazing to me how the stock splits tends to boost the price, or at least it's the perception. What's the underlying mecanism ?
- drexlspivey 2y ago
  You can’t buy options on a $1000 stock, the notional amount for each contract would be $100k
  - nvy 2y ago
    >You can’t buy options on a $1000 stock Yes you can.
    - drexlspivey 2y ago
      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
      - cbanek 2y ago
        I heard they are also announcing a 10 for 1 stock split, which would really help the option cost too due to the share price going to about $100
      - choppaface 2y ago
        Call / put spreads work
      - jfrbfbreudh 2y ago
        You quite literally can; a $1000 strike call contract on NVDA 2-DTE is <$2000 $1140 strike is <$200 (before markets closed today obviously)
        drexlspivey 2y ago
        Man.. this forum is something else
        sicromoft 2y ago
        It quite literally is not something else
        deleted 2y ago
        [deleted]
      - _zoltan_ 2y ago
        aaaand? why should you be able to? get a bigger account if you want to play around with 1k stocks.
        pertymcpert 2y ago
        Stock price is completely arbitrary. AMD could have 5 digit share prices if it did reverse splits.
  - ptsneves 2y ago
    Yep. It is really hard to trade options even for hedging when the notional is so high. Of course you can do combinations of strategies to lower the upfront but I imagine many brokers might just not give the credit worthiness or permissions for that. Don’t know why your were downvoted. Unless I miss something obvious, as well.
  - epolanski 2y ago
    Somebody think about the casinos!
- throwaway20004 2y ago
  maybe allows more retail investors to buy? hypothetically fractional shares solves this but i bet in practice, not many folks buy fractional shares.
  - TheAlchemist 2y ago
    That's about the only 'rational' explanation I can think of - but I suspect that's really small money overall - it's not people who can only afford to buy 50$ 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 ?
    - deleted 2y ago
      [deleted]
    - Detrytus 2y ago
      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.
- almog 2y ago
  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.
  - choppaface 2y ago
    Options strategies also become more accessible and the leverage of one-cent differences increases dramatically
- SantiagoQ 2y ago
  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.
  - jsnell 2y ago
    That's not at all how stock splits work. You're probably confusing them with buybacks.
- nvy 2y ago
  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.
- tverbeure 2y ago
  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 $100, you get 75 shares. The lower your income, the more you miss out on ESPP that way. It's not a huge deal if the stock is flat (you only get a 15% discount), but for a fast appreciating stock, those additional 5 shares can be real money.
- epolanski 2y ago
  Many people around the world can invest only small amounts per month. A 1000$ price makes the entry high. Only some trading platforms allow for buying of fractional shares. The underlying logic is that lower per share price would increase volume and maybe a bit the price.
- matwood 2y ago
  Makes options more accessible. It also an additional signal of bullishness from the company. Before partial shares and odd lots, it also let less money buy the stock.
mbesto 2y ago
> the stock barely moves even with stock split + dividend increase. This looks rather bearish. Already priced in. Look at comps of PE ratios in tech focused companies and you'll see what I mean.
jejeyyy77 2y ago
lol, you realize markets are closed right? this is all low volume after market trading.
- almog 2y ago
  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.
- Bluecobra 2y ago
  Depending on your broker you are able to trade certain symbols 24 hours a day now: https://www.bankrate.com/investing/24-hour-stock-trading/ https://www.bankrate.com/investing/24-hour-stock-trading/
gopher_space 2y ago
Is it just that they rely on someone else’s fab?
martinpw 2y ago
Bit premature to say that. It's now up 7% after hours. And of course tomorrow is what really matters.
- almog 2y ago
  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.
  - acchow 2y ago
    Last earnings, it popped up 8% during AH trading. But that was after falling 7% during the week leading up to earnings. This time around, the stock has been up slightly over the past week, and now popping 5.5% during AH trading.
    - almog 2y ago
      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.

by almog 2y ago

TheAlchemist 2y ago

Dividend yield is 0.02% - the increase is meaningless anyway. It's quite amazing to me how the stock splits tends to boost the price, or at least it's the perception. What's the underlying mecanism ?

drexlspivey 2y ago
You can’t buy options on a $1000 stock, the notional amount for each contract would be $100k
- nvy 2y ago
  >You can’t buy options on a $1000 stock Yes you can.
  - drexlspivey 2y ago
    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
    - cbanek 2y ago
      I heard they are also announcing a 10 for 1 stock split, which would really help the option cost too due to the share price going to about $100
    - choppaface 2y ago
      Call / put spreads work
    - jfrbfbreudh 2y ago
      You quite literally can; a $1000 strike call contract on NVDA 2-DTE is <$2000 $1140 strike is <$200 (before markets closed today obviously)
      - drexlspivey 2y ago
        Man.. this forum is something else
        sicromoft 2y ago
        It quite literally is not something else
        deleted 2y ago
        [deleted]
    - _zoltan_ 2y ago
      aaaand? why should you be able to? get a bigger account if you want to play around with 1k stocks.
      - pertymcpert 2y ago
        Stock price is completely arbitrary. AMD could have 5 digit share prices if it did reverse splits.
- ptsneves 2y ago
  Yep. It is really hard to trade options even for hedging when the notional is so high. Of course you can do combinations of strategies to lower the upfront but I imagine many brokers might just not give the credit worthiness or permissions for that. Don’t know why your were downvoted. Unless I miss something obvious, as well.
- epolanski 2y ago
  Somebody think about the casinos!
throwaway20004 2y ago
maybe allows more retail investors to buy? hypothetically fractional shares solves this but i bet in practice, not many folks buy fractional shares.
- TheAlchemist 2y ago
  That's about the only 'rational' explanation I can think of - but I suspect that's really small money overall - it's not people who can only afford to buy 50$ 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 ?
  - deleted 2y ago
    [deleted]
  - Detrytus 2y ago
    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.
almog 2y ago
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.
- choppaface 2y ago
  Options strategies also become more accessible and the leverage of one-cent differences increases dramatically
SantiagoQ 2y ago
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.
- jsnell 2y ago
  That's not at all how stock splits work. You're probably confusing them with buybacks.
nvy 2y ago
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.
tverbeure 2y ago
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 $100, you get 75 shares. The lower your income, the more you miss out on ESPP that way. It's not a huge deal if the stock is flat (you only get a 15% discount), but for a fast appreciating stock, those additional 5 shares can be real money.
epolanski 2y ago
Many people around the world can invest only small amounts per month. A 1000$ price makes the entry high. Only some trading platforms allow for buying of fractional shares. The underlying logic is that lower per share price would increase volume and maybe a bit the price.
matwood 2y ago
Makes options more accessible. It also an additional signal of bullishness from the company. Before partial shares and odd lots, it also let less money buy the stock.

mbesto 2y ago

> the stock barely moves even with stock split + dividend increase. This looks rather bearish. Already priced in. Look at comps of PE ratios in tech focused companies and you'll see what I mean.

jejeyyy77 2y ago

lol, you realize markets are closed right? this is all low volume after market trading.

almog 2y ago
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.
Bluecobra 2y ago
Depending on your broker you are able to trade certain symbols 24 hours a day now: https://www.bankrate.com/investing/24-hour-stock-trading/ https://www.bankrate.com/investing/24-hour-stock-trading/

gopher_space 2y ago

Is it just that they rely on someone else’s fab?

martinpw 2y ago

Bit premature to say that. It's now up 7% after hours. And of course tomorrow is what really matters.

almog 2y ago
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.
- acchow 2y ago
  Last earnings, it popped up 8% during AH trading. But that was after falling 7% during the week leading up to earnings. This time around, the stock has been up slightly over the past week, and now popping 5.5% during AH trading.
  - almog 2y ago
    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.