The split ✂️
12 April 2022
Normally a split is when the price of a share has risen a lot, the old share is redivided into X new shares, so that the price is affordable again for the small holders.
Financially it doesn't change anything: I had a pizza with 4 slices, I divide the same pizza into 8 slices: each new slice is half the size of the previous one but the pizza has not changed in size. 2 times more slices 2 times smaller.
Examples of splits: in 2020, after strong increases in their respective share prices, Apple and Tesla announce splits. Why not.
Now, a month ago, we saw a more folkloric split: Amazon. Because Amazon announces this split while its price increase over the last months is nada, zero, nicht. In fact, for the last 18 months, the stock has been around $3000. The only reason for this split would seem to be to give the stock price some color. It worked well, but only for a few days: in fine, remember, the size of the pizza does not change. It took a few days for the market to integrate this notion, but it is now the case: Amazon is still worth nearly $3000 tonight.
Today, here's the split that could only happen in a market as gamestopian as the current one: Shopify. Because what has Shopify's stock price done in the last 18 months? It's lost 66%. The stock has gone from $1,500 to $600. Splitting after a decline is new in 2022. It's a sign of the times. Kind of a desperate move, and it won't change the size of the pizza.
Shopify releases in 15 days. If you're a shareholder, I remind you that Shopify is valued tonight at nearly $80 Billion. In the last quarter, it made an operating profit of $14 Million...
Have a great week,
Charles
Disclaimer
This presentation is a promotional document. The content of this document is communicated by and is the property of Monocle Asset Management. Monocle Asset Management is a portfolio management company approved by the Autorité des Marchés Financiers under number GP-20000040 and registered with the ORIAS as an insurance broker under number 10058146. No information contained in this document should be construed as having any contractual value. This document is produced for information purposes only. The prospects mentioned are subject to change and do not constitute a commitment or a guarantee. Access to the products and services presented here may be subject to restrictions for certain persons or countries. Tax treatment depends on individual circumstances. The fund mentioned in this document (Monocle Fund SICAV) is authorized for marketing in France and possibly in other countries where the law permits. Before making any investment, it is advisable to check whether the investor is legally entitled to subscribe to the fund. The risks, costs and recommended investment period of the funds presented are described in the KIDD (key investor information documents) and the prospectus, available free of charge from Monocle Asset Management and on the website. The KIDD must be given to the subscribers before the subscription. Past performances are not a reliable indicator of future performances. Monocle Asset Management cannot be held responsible for any decision taken or not taken on the basis of information contained in this document, nor for the use that could be made by a third party. The investor may lose all or part of the amount of capital invested, as the funds are not capital guaranteed.
To unsubscribe or for any information request, you can email us at monocle@monocle.lu
