Tesla Stock Split ✂️

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Tesla Stock Split

Tesla’s board approved a five-for-one stock split yesterday, and shares jumped 7% in after-hours trading as a result. The company’s stock has more than tripled in value this year and is up 485% in the last 365 days. 

The remarkable run has pushed Tesla’s stock price over $1000 which led to CEO Elon Musk criticizing the high price. He previously mentioned a split was worth discussing, but until now it seemed like that conversation would not come until the shareholder meeting in September.

Tesla said the split was occurring to make stock ownership more available to employees and investors. Right now, just one share costs over $1300, so investors would need a lot of money to buy a full share of Tesla stock while also maintaining a diversified portfolio.

Last month Apple announced a four-to-one split for similar reasons, but splits are not as common today as they were in the past. It used to be common stocks to split when they hit $100, but it is now a fairly rare occurrence. 

The split will not affect the company’s valuation, but splits can lead to a price increase as this one did. A new pool of investors will now be able to buy full shares of Tesla, but with fractional trading the split will not have the impact it once may have had.

I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.

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