Stock Market

Tesla stock is in the spotlight as a 3-1 stock split takes effect. 

Akash Sriram’s

Reuters – Tesla (NASDAQ: TSLA) Inc’s stock is in the spotlight on Thursday after the world’s most valuable automaker divided its stock for the second time in two years in order to attract more retail investors.

In premarket trading, shares of the electric vehicle manufacturer climbed 1.5% to $301.5. Before the three-for-one split, the shares ended at $891.29 on Wednesday.
“Tesla understands the importance of maintaining its clout with the retail audience, especially after the previous year or so of retail investors exercising their biceps,” said Callie Cox, an analyst at trading and investing site eToro.

Tesla’s shares have decreased around 11% since the firm revealed intentions to boost its share count in March, and are trading almost flat this month.

“In true buy-the-rumor, sell-the-news fashion, investors tend to substantially pull down purchases of splitting equities in the weeks leading up to the effective split date, causing price momentum to decelerate,” Vanda (NASDAQ: VNDA) Research analysts said in a note.

On the social media site stocktwits.com, Tesla’s ticker was trending, indicating increased talk among individual investors.
This year, high-growth businesses such as Amazon.com (NASDAQ: AMZN) and Google parent Alphabet (NASDAQ: GOOGL) announced share splits, underlining the growing need to diversify their investor base.

In August 2020, Tesla announced a five-for-one stock split.

A stock split has little effect on a company’s fundamentals, but it makes it easier for individual investors to make minor trades. However, the benefits of stock splits are becoming less evident as brokerages allow clients to purchase fractional shares of a company’s stock.

Tesla shares, which launched at $17 in 2010, have risen to more than $1,200 since the stock split in 2020, bringing the company’s market valuation to more than $1 trillion late last year.

However, the stock has dropped nearly 16% this year because of concerns about rapid US interest rate hikes and geopolitical uncertainties, which spurred a sell-off in high-growth equities.

Tesla’s most recent three-for-one split implies that stockholders will receive two more shares for every share they had on August 17.

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button