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iPad, Mac, iPhone growth potential seen to propel Apple stock to $375

post #1 of 48
Thread Starter 
A prominent Wall Street analyst has upped his price target for Apple stock from $280 to $375, citing stronger than expected iPad, iPhone and Mac sales, and the fact that the company remains "a small fish in three very large ponds."

On Monday, Charlie Wolf with Needham & Company issued his first valuation report on Apple since February. He upped his price target to $375, saying that the trajectory of iPad and Mac sales was "materially higher" than he forecast earlier in the year. In addition, iPhone owners appear to be upgrading faster than he had assumed.

In February, Wolf forecast that Apple would sell just 2 million iPads in 2010, and 6 million in 2011. In reality, Apple managed to sell its first 2 million iPads in under 2 months.

Now, he conceded, Apple is on track to sell more than 12 million annually before the international rollout of the iPad is even completed.

Mac sales are strong, too, on pace for 14 million in calendar 2010 -- a number more than 50 percent higher than what he had previously forecast for the year. And iPhone sales are strong as well, with Apple's struggles to meet iPhone 4 demand suggesting that customers are upgrading faster than Wolf's analysis had assumed.



And even with all of this growth, Apple still has the potential to continue moving upward, because the iPod is its only major product that truly dominates its market.

"Apple is a small fish in three very large ponds," Wolf wrote. "The company holds just a 4+% share of the personal computer market. The combined iPhone and iPod halo effects, not to mention the emerging iPad halo effect, should enable the Mac to continue to gain share in the worldwide home PC market. "The iPhone is also a small player in the smartphone market with just a 14% worldwide market share."

He continued: "Finally, while the iPad currently has the tablet market to itself, the early evidence suggests that the device is beginning to capture share from the netbook market and is invading the business market at a rate unprecedented for an Apple product."
post #2 of 48
$375 by 05/01/11 just makes sense.
post #3 of 48
Oh how I wish I hadn't sold all my APPL stock a few years ago. Oh well, I still made a tidy profit.
post #4 of 48
When did Apple start selling candy?
post #5 of 48
Quote:
Originally Posted by Trajectory View Post

Oh how I wish I hadn't sold all my APPL stock a few years ago. Oh well, I still made a tidy profit.

Regret and guilt. Two useless emotions...... (but keep us straight, I suppose).
post #6 of 48
Quote:
Originally Posted by Trajectory View Post

Oh how I wish I hadn't sold all my APPL stock a few years ago. Oh well, I still made a tidy profit.

What does Appell Petroleum have to do with this discussion?

post #7 of 48
Quote:
Originally Posted by AppleInsider View Post

A prominent Wall Street analyst has upped his price target for Apple stock from $280 to $375, citing stronger than expected iPad, iPhone and Mac sales, and the fact that the company remains "a small fish in three very large ponds."

On Monday, Charlie Wolf with Needham & Company issued his first valuation report on Apple since February. He upped his price target to $375, saying that the trajectory of iPad and Mac sales was "materially higher" than he forecast earlier in the year. In addition, iPhone owners appear to be upgrading faster than he had assumed.

In February, Wolf forecast that Apple would sell just 2 million iPads in 2010, and 6 million in 2011. In reality, Apple managed to sell its first 2 million iPads in under 2 months.

Now, he conceded, Apple is on track to sell more than 12 million annually before the international rollout of the iPad is even completed.

Mac sales are strong, too, on pace for 14 million in calendar 2010 -- a number more than 50 percent higher than what he had previously forecast for the year. And iPhone sales are strong as well, with Apple's struggles to meet iPhone 4 demand suggesting that customers are upgrading faster than Wolf's analysis had assumed.



And even with all of this growth, Apple still has the potential to continue moving upward, because the iPod is its only major product that truly dominates its market.

"Apple is a small fish in three very large ponds," Wolf wrote. "The company holds just a 4+% share of the personal computer market. The combined iPhone and iPod halo effects, not to mention the emerging iPad halo effect, should enable the Mac to continue to gain share in the worldwide home PC market. "The iPhone is also a small player in the smartphone market with just a 14% worldwide market share."

He continued: "Finally, while the iPad currently has the tablet market to itself, the early evidence suggests that the device is beginning to capture share from the netbook market and is invading the business market at a rate unprecedented for an Apple product."

The IPAD has no halo effect.

The ipad is an under the water switch to macOSX device .

the ipad IS the result of all the other halos for yrs past .

the ipad is a full blown apple computer running on full
blown MAC OSX are a mac convert .

ipad sales must be counted under mac computer sales.

lines are being crossed

every apple device in reality is a computer
even the 160g IPOD

just saying


nano phone is coming

9
whats in a name ? 
beatles
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whats in a name ? 
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post #8 of 48
Well hurry up about it. I have a wedding and a 7 month honeymoon to pay for.
post #9 of 48
Is it too late to get in?

Malo periculosam, libertatem quam quietam servitutem.

(I prefer the tumult of liberty to the quiet of servitude.)

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Malo periculosam, libertatem quam quietam servitutem.

(I prefer the tumult of liberty to the quiet of servitude.)

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post #10 of 48
The business adoption of the iPad really is huge and something that apple-haters simply cannot wrap their heads around. Android tablets won't be as popular with business because of security concerns and Windows tablets are... Windows tablets. The only potential competitor here is an HP/Palm tablet, but it will take a while for HP to gain credibility with that (if they ever can).

Regarding halo effects -- I think there are mutually reinforcing halo effects going on at this point. Executives are now accustomed to iPhones and MacBook Pros, so the iPad doesn't seem so exotic to them. And then once iPads invade, it will make Macs more appealing, and so forth. Virtuous cycle for apple.
post #11 of 48
Quote:
Originally Posted by jazzguru View Post

Is it too late to get in?

Buy today and if AAPL reaches Wolf's target, you'd be up 40%+ on your investment. That would be your bet.

I admit to being a Fanatical Moderate. I Disdain the Inane. Vyizderzominymororzizazizdenderizorziz?

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I admit to being a Fanatical Moderate. I Disdain the Inane. Vyizderzominymororzizazizdenderizorziz?

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post #12 of 48
"Is it too late to get it?" Not at all. I think you'll regret it if you don't get in.
post #13 of 48
Quote:
Originally Posted by delreyjones View Post

"Is it too late to get it?" Not at all. I think you'll regret it if you don't get in.

Doing a little "front running", are we?
Pity the agnostic dyslectic. They spend all their time contemplating the existence of dog.
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Pity the agnostic dyslectic. They spend all their time contemplating the existence of dog.
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post #14 of 48
Quote:
Originally Posted by jazzguru View Post

Is it too late to get in?

Not if this analyst's predictions are correct. On the other hand, it is possible that AAPL will be trading at half its current price a year from now. It's happened before, more than once.
post #15 of 48
Quote:
Originally Posted by jazzguru View Post

Is it too late to get in?

Yup. You're too late. Teams are locked. You can't play.
post #16 of 48
I don't know if I trust a financial analysis with a "fudge factor"
post #17 of 48
Quote:
Originally Posted by malax View Post

Not if this analyst's predictions are correct. On the other hand, it is possible that AAPL will be trading at half its current price a year from now. It's happened before, more than once.

However, I'd like to think it is because of a stock split. What is the history of stock splits? Does Steve have some absolute price and PE in mind before he considers a stock split? Does Google's share price, a la no stock split, make him reluctant to do so? Also, are there enough shares voted in to declare a stock split, without having to vote some more (which would presage such an event, and often serve as a prophetic, and profitable sign)?
post #18 of 48
Quote:
Originally Posted by xZu View Post

I don't know if I trust a financial analysis with a "fudge factor"

unless that analyst was also a therapist
post #19 of 48
Quote:
Originally Posted by Bagman View Post

However, I'd like to think it is because of a stock split. What is the history of stock splits? Does Steve have some absolute price and PE in mind before he considers a stock split? Does Google's share price, a la no stock split, make him reluctant to do so? Also, are there enough shares voted in to declare a stock split, without having to vote some more (which would presage such an event, and often serve as a prophetic, and profitable sign)?

Splits have zero impact on shareholder value, and zero impact on P/E. They do nothing for anyone who is capable of buying even one share. Pardon the analogy, but if you take an apple and cut it into four quarters, you have four quarters of one apple, not four apples.
Please don't be insane.
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post #20 of 48
This one never grows old, does it?

(Hail, P. T. Barnum!)

PS: This is in reply to Dr Millmoss above.
post #21 of 48
Quote:
Originally Posted by anantksundaram View Post

This one never grows old, does it?

(Hail, P. T. Barnum!)

PS: This is in reply to Dr Millmoss above.

I don't assume that anyone is a sucker or is necessarily trying to make someone else into a sucker, but it's clear that not everyone understands how equities work. But I do happen to have a one last bridge in my inventory which I'd be willing to sell at the right price.
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post #22 of 48
I am just waiting for $500
Enjoying the new Mac Pro ... it's smokin'
Been using Apple since Apple ][ - Long on AAPL so biased
nMac Pro 6 Core, MacBookPro i7, MacBookPro i5, iPhones 5 and 5s, iPad Air, 2013 Mac mini.
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Enjoying the new Mac Pro ... it's smokin'
Been using Apple since Apple ][ - Long on AAPL so biased
nMac Pro 6 Core, MacBookPro i7, MacBookPro i5, iPhones 5 and 5s, iPad Air, 2013 Mac mini.
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post #23 of 48
Quote:
Originally Posted by Bagman View Post

However, I'd like to think it is because of a stock split. What is the history of stock splits? Does Steve have some absolute price and PE in mind before he considers a stock split? Does Google's share price, a la no stock split, make him reluctant to do so? Also, are there enough shares voted in to declare a stock split, without having to vote some more (which would presage such an event, and often serve as a prophetic, and profitable sign)?

Splits: Jun 16, 1987 [2:1], Jun 21, 2000 [2:1], Feb 28, 2005 [2:1]

Source: Yahoo Finance (http://finance.yahoo.com/q/bc?s=AAPL+Basic+Chart&t=my)

Apple used to try to keep the stock around $50 a share. In recent years, it doesn't appear that Apple has any interest in splitting the stock. They have provided no explanation.

I don't even recall what happened at the last split. I assume that I received a proxy ballot to approve the 2-for-1 split, but I don't remember. If I did vote, I'm sure it was to approve the split.

In any case, institutional investors own the majority of outstanding AAPL shares. There are relatively few retailer investors like me and our voices don't count for much. Also, I doubt if Steve really cares what Google does with their stock.
post #24 of 48
Quote:
Originally Posted by Dr Millmoss View Post

Splits have zero impact on shareholder value, and zero impact on P/E. They do nothing for anyone who is capable of buying even one share. Pardon the analogy, but if you take an apple and cut it into four quarters, you have four quarters of one apple, not four apples.

This is mostly true, however lower share prices drive transaction activity and volatility. This is one reason why Buffett split Class B Berkshire Hathaway shares (BRK-B) fifty-to-one. Increased trading volume allowed Berkshire-Hathaway to be invited to join the S&P 500 and thus, to be included in many more index funds and ETFs.
post #25 of 48
Quote:
Originally Posted by digitalclips View Post

I am just waiting for $500

And it won't be the end of it. Lucky the ones who bought the shares in the early 90ies.
post #26 of 48
Quote:
Originally Posted by extremeskater View Post

At 500.00 I do believe I would retire.

From your post I have to assume, that you are around 64, unless you opt for early retirement. In any case I wish you luck with your shares. And a happy retirement
post #27 of 48
Quote:
Originally Posted by Dr Millmoss View Post

Splits have zero impact on shareholder value, and zero impact on P/E. They do nothing for anyone who is capable of buying even one share. Pardon the analogy, but if you take an apple and cut it into four quarters, you have four quarters of one apple, not four apples.

I think you misunderstood me. There is ample evidence to refute your assertion that splits have no impact on shareholder value -- in the long run (they, of course, have no impact, at split, on the owner's stock valuation, or PE). Stocks, on balance, however, tend to go up post split (after the initial post split volatility), and this tends to be the result of company and investor confidence in continued share appreciation (no company in its right mind would do a normal split in a declining expectation market). However, in recent years (since the go-go days pre-dot.com meltdown) companies seem to be content in letting the price ride up, without trying to resort to splits to increase investor interest. (also, trading fees have come down so much as to make odd lot trades the norm, so trading a few shares of Google, instead of 100 share lots, does not impact your trading costs too much).

Anyhow, others have suggested that Steve is less concerned these days with the absolute stock price, and I was suggesting that allowing Apple to go up in the stratosphere, like Google, will not significantly impact trading activity, and may be the plan all along. Also, knowing whether there is treasury stock to float such a split gives a hint of a potential split, since you have to have this stock voted and in place before you can execute a standard split.

My comparison to Google has to do with the usual competition and Silly Valley machoism at stake, and I'll bet Steve would just as soon let Apple get higher than Google - sooner rather than later. Look how Google's unsustainable PE has declined, as Apple's has tended to stay the same (I'm guessing). Apple is a bargain PE, by the way, if you believe historical comparisons for a high tech company, and we all hope it stays low, as the stock climbs to the stratosphere - right?
post #28 of 48
Quote:
Originally Posted by jazzguru View Post

Is it too late to get in?

No. Still loads of growth potential.
post #29 of 48
Quote:
Originally Posted by cvaldes1831 View Post

This is mostly true, however lower share prices drive transaction activity and volatility. This is one reason why Buffett split Class B Berkshire Hathaway shares (BRK-B) fifty-to-one. Increased trading volume allowed Berkshire-Hathaway to be invited to join the S&P 500 and thus, to be included in many more index funds and ETFs.

My original statement holds true, especially given your example of a stock in which a single share was selling something north of $4,000 before the split, as I recall.
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post #30 of 48
In case it wasn't quantified yet, $375/share at the current number of shares gives AAPL a market cap of $342.6 billion. That is $24 billion over the current world leader, Exxon (XOM). It's certainly possible, but I have to wonder if another 115 points in 12 months is a little bullish.
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post #31 of 48
Quote:
Originally Posted by solipsism View Post

In case it was quantified yet, $375/share at the current number of shares gives AAPL a market cap of $342.6 billion. That is $24 billion over the current world leader, Exxon (XOM). It's certainly possible, but I have to wonder if another 115 points in 12 months is a little bullish.

Yeah... I'm kind of in the same boat. Every time I ask myself "how many shares would I have to own to make $1MM?" I get burned...

I almost seriously consider doing really stupid things like selling 60 $250/Jan12 Puts and buying 60 $250 Calls. Invest $36,000 cash, and you too could be a millionaire! (OK, so you do need to have another $100k in the account in cash or equities to be able to do it...)

As much as I do believe Apple will be well over $350 in 12 months, I'll try and not get too greedy this time around.
post #32 of 48
Quote:
Originally Posted by solipsism View Post

In case it was quantified yet, $375/share at the current number of shares gives AAPL a market cap of $342.6 billion. That is $24 billion over the current world leader, Exxon (XOM). It's certainly possible, but I have to wonder if another 115 points in 12 months is a little bullish.

Yeah, I am with you on that.
post #33 of 48
Quote:
Originally Posted by cvaldes1831 View Post

This is mostly true, however lower share prices drive transaction activity and volatility. This is one reason why Buffett split Class B Berkshire Hathaway shares (BRK-B) fifty-to-one. Increased trading volume allowed Berkshire-Hathaway to be invited to join the S&P 500 and thus, to be included in many more index funds and ETFs.

That is an exceptional case of a stock that was trading in the thousands, and Buffett needed to be able to use stock as a medium of exchange in his acquisition of BNSF, the railroad company. Not at all the norm.
post #34 of 48
Quote:
Originally Posted by Bagman View Post

I think you misunderstood me. There is ample evidence to refute your assertion that splits have no impact on shareholder value -- in the long run (they, of course, have no impact, at split, on the owner's stock valuation, or PE). Stocks, on balance, however, tend to go up post split (after the initial post split volatility), and this tends to be the result of company and investor confidence in continued share appreciation (no company in its right mind would do a normal split in a declining expectation market). However, in recent years (since the go-go days pre-dot.com meltdown) companies seem to be content in letting the price ride up, without trying to resort to splits to increase investor interest. (also, trading fees have come down so much as to make odd lot trades the norm, so trading a few shares of Google, instead of 100 share lots, does not impact your trading costs too much).

Anyhow, others have suggested that Steve is less concerned these days with the absolute stock price, and I was suggesting that allowing Apple to go up in the stratosphere, like Google, will not significantly impact trading activity, and may be the plan all along. Also, knowing whether there is treasury stock to float such a split gives a hint of a potential split, since you have to have this stock voted and in place before you can execute a standard split.

My comparison to Google has to do with the usual competition and Silly Valley machoism at stake, and I'll bet Steve would just as soon let Apple get higher than Google - sooner rather than later. Look how Google's unsustainable PE has declined, as Apple's has tended to stay the same (I'm guessing). Apple is a bargain PE, by the way, if you believe historical comparisons for a high tech company, and we all hope it stays low, as the stock climbs to the stratosphere - right?

Yes, you can create short-term churn by any number of bogus means, but anyone who believes that splits increase shareholder value in any way, is gaga. I doubt very seriously that Steve or anyone on the board is interested in trying to "beat" GOOG's share price. That's a ludicrous exercise, and one I'd like to believe that the smart people running Apple would think likewise. The reason AAPL is not being split is that the current share price does not meaningfully impede even the smallest investors from buying in.

As for P/E, it is a reflection of investor sentiment about future earnings growth rates. Lower is by no means necessarily better.

As far as the future is concerned, I never guess.
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post #35 of 48
Quote:
Originally Posted by Blastdoor View Post

The business adoption of the iPad really is huge and something that apple-haters simply cannot wrap their heads around. Android tablets won't be as popular with business because of security concerns and Windows tablets are... Windows tablets. The only potential competitor here is an HP/Palm tablet, but it will take a while for HP to gain credibility with that (if they ever can).

Regarding halo effects -- I think there are mutually reinforcing halo effects going on at this point. Executives are now accustomed to iPhones and MacBook Pros, so the iPad doesn't seem so exotic to them. And then once iPads invade, it will make Macs more appealing, and so forth. Virtuous cycle for apple.

Do you have any eveidence of business adoption of the iPad? Links with real data? We have exactly one executive that brought his iPad into work.

It struggled to get on our WPA2 wireless network. Watching him type in the key was pretty dam funny since it must be 25+ characters long. We had to shut off our Cisco Clean Access box for his floor just so it would work (nice security) and even then it kept dropping off the network.

That lasted a whole half a day and we have not seen it again.
post #36 of 48
Quote:
Originally Posted by solipsism View Post

In case it wasn't quantified yet, $375/share at the current number of shares gives AAPL a market cap of $342.6 billion. That is $24 billion over the current world leader, Exxon (XOM). It's certainly possible, but I have to wonder if another 115 points in 12 months is a little bullish.

Someone is going to make a killing shorting this stuff if it ever hits that high. The tumble will be UGLY.
post #37 of 48
Quote:
Originally Posted by bettieblue View Post

Someone is going to make a killing shorting this stuff if it ever hits that high. The tumble will be UGLY.

Or, Someone is going to get killed shorting this stuff if it ever hits that high. When AAPL continues past $375 per share, the shorts will be destroyed.
post #38 of 48
Quote:
Originally Posted by bettieblue View Post

Someone is going to make a killing shorting this stuff if it ever hits that high. The tumble will be UGLY.

And your reasoning for this is what, exactly?
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post #39 of 48
Quote:
Originally Posted by Dr Millmoss View Post

Yes, you can create short-term churn by any number of bogus means, but anyone who believes that splits increase shareholder value in any way, is gaga. I doubt very seriously that Steve or anyone on the board is interested in trying to "beat" GOOG's share price. That's a ludicrous exercise, and one I'd like to believe that the smart people running Apple would think likewise. The reason AAPL is not being split is that the current share price does not meaningfully impede even the smallest investors from buying in.

As for P/E, it is a reflection of investor sentiment about future earnings growth rates. Lower is by no means necessarily better.

As far as the future is concerned, I never guess.

You don't seem to be able to parse my words correctly, so let me elaborate:

No one splits a stock to cause churn (where did you infer this - not from me). You have neglected decades of known research that clearly shows a direct correlation - OVER TIME, not immediately, in shareholder value increases and stock splits (this makes sense, because only companies that have faith in their future earnings potential tend to be the ones that split shares, with the notable exception of recent years following the dot.com bust. I've been investing and trading for 52 years - yes 52 years, have traded in mutual funds since 1971, and actively traded on the internet since the mid to late 90's, and many spendid research houses (such as the "Right Line Split Report", "Market Logic", and others have seen this tendency. Don't wish to continue the debate, but it is real, quantifiable, and tangible.

As for PE ratios, much debate exists as to its proper use, and PE as it is usually connoted is the HISTORICAL PE (price/past earnings), not so called forward PE ratios. As a former accountant, I am well aware you can play around with the numbers on earnings from GAAP numbers, present value numbers, pro forma numbers, etc, etc, and remove anything you like if you rationalize it being non-recurring. Anyhow, the PE is only useful (in my opinion, and in the opinion of most investors) if you compare Apples to Apples (sorry bout that), ie. compare within like companies in like markets - difficult to do sometimes, particularly if there are few direct competitors. As you intimated, you may "award" a company with a higher PE if you think their future earnings will be better than a competitor.

In a listless market like this one (volatile but almost directionless as this is), and in an almost disinflationary market, PE's of most companies tend to go down, so my take on Apple's low PE makes me comfortable that they will have no problem sustaining the growth, compared to historical PE's for like companies. Since earnings in such an environment as now tend to go directly to the bottom line, low inflationary (borderline disinflatinary) markets tend to be markets better suited for investment (unless we go into true deflationary times - gad, hope not).

Ferchrissakes, the PE of Apple is little more than more staid companies, and would be much higher, if this market was on fire. I just believe that keeping Apple's stock price rising, without splits, is OK now, and, as you mentioned, not of much concern to the average Joe Investor (assuming he is logical - lots of folks don't know or care about PE, and will set an artificial price point, above which they have no intention of buying - even a share (my sister is this way, and no amount of education can make her consider a stock with such a "high" stock price, even though she intellectually knows full well about PE ratios. Stock splits usually appeal to this type of investor, even though it shouldn't matter.

I still think Steve Jobs would love to have a stock price higher than Google's (with comparable PE's, of course). If you don't think he got a kick out of the whole Apple vs Microsoft market valuation thingie, then you have a much different opinion of him than I. That little milestone must have felt good to him, don't you think, even though the party line made him pooh pooh the obvious implications. Lots of folks have pointed out the illogic of direct comparisons here, but the average investor lumps Apple in the same high tech arena as Microsoft, Google, IBM, Cisco, HP, etc., and thus these companies tend to get compared all the time.
post #40 of 48
Quote:
Originally Posted by Dr Millmoss View Post

Yes, you can create short-term churn by any number of bogus means, but anyone who believes that splits increase shareholder value in any way, is gaga.

While any current holders aren’t making or losing money on a split, it does open up the possibility of buyers getting more shares than they wold otherwise buy at a higher share price. If you have millions of people doing this does it not affect the valuation?
Scenerio 1: Amalgamated Trolling’s stock price is $10,000 per share. Teckstud wants to invest $15,000 into this company because he believes strongly in the services they offer. The maximum he can invest is $10,000.

Scenario 2: Amalgamated Trolling has decided to do a 2:1 split of their stock valued at $10,000 per share. Each share now costs $5,000. Teckstud is now able to invest his full $15,000 for a total of 3 shares.
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