In an indication that stock splits could fuel market rallies, both Tesla and Amazon saw surges this month in the wake of split announcements, reports an article in Bloomberg. Tesla stock rose 8% this week after announcing plans for their second split in less than 2 years, and Amazon shot up more than 5% one day after they announced a 20-for-1 split.

Theoretically, a split shouldn’t affect the fundamentals a company is built on, and if investors don’t want to spend exponentially on a high stock price they can easily switch to fractional shares. But the recent splits are causing a stampede of day traders and, sparking major rallies for these companies.

The split announcements resulted in “significant” interest from retail investors in Amazon, and Fidelity reported that Tesla was the most-purchased stock amongst its clients, according to the article. Splits can make “stock look more attractive, luring new buyers,” said Lindsey Bell of Ally Invest Securities, while Gina Martin Adams of Bloomberg Intelligence said, “It is just a sentiment effect,” as quoted in the article.

Before 2020, share splits were virtually a thing of the past: while 2006 & 2007 had a combined total of 41 splits, there were only 2 splits in the S&P 500 in 2019. But Apple and Tesla brought the practice back into fashion when they both split their stocks in 2020. When Tesla split its stock in 2020, its shares skyrocketed more than 60% from announcement to execution. Apple’s soared 30% during the same time frame, with weekly retail purchases raking in almost $1 billion leading up to the split’s execution day. With that kind of outperformance, more companies are now following the trend.