Logitech (LOGI): Added to Position

Logitech (LOGI) finally got close enough to testing its 2022 lows on Friday that it triggered my next buy order which filled at $50.95. The buy locked in a substantial -45.65% discount on some of the shares I sold for $93.74 back on November 5, 2020, and also raised my per-share cost +$0.75 from $12.70 to $13.45.

From here, my next buy price target is $42.05, above a past point of key support, and my next sell target is around $78.50, just under a past point of resistance.

LOGI closed the week at $50.80, down -0.29% from where I added Friday.

Tesla (TSLA): **3-for-1 Stock Split**

Tesla (TSLA) had a 3:1 stock split Thursday morning, meaning anyone holding shares of Tesla received three shares for every one they held (i.e. two extra shares in additional to the original). While new traders and those inexperienced with the markets tend to get excited about stock splits, it’s important to remember that stock splits add no value to a stock since the price is divided by the number of new shares added. 

For example, with Tesla trading around $900 before the split, its new price was $300 after the split ($900 divided by 3). There are three times as many shares outstanding, sure, but the price of each share is a third of its value prior to the split.

If splits add no value, why do companies split their stocks?

Companies execute stock splits to make the price more attainable to retail investors and to lower the price of options. As a result, companies typically do see an increase in the value of their stock after the split as smaller investors who may have been previously intimidated by a high share price enter positions.

Additionally, since options are priced in lots of 100 shares per contract, a stock split substantially reduces the cost for traders and investors to place options strategies. The result increases the volume of options trading in a stock, and often increases the stock price as the activity generates more interest in the stock.