Tesla splitting stock to make richly-valued shares attainable again

Tesla splitting stock to make richly-valued shares attainable again

Tesla is not the only firm to have announced a stock split in recent weeks. It will come into effect at the close of trading on August 28 in the U.S. This means shareholders will receive five shares for every single share they own.

However, Tesla has announced its shares will undergo a five-way split on August 28th.

Each stockholder of record on August 21 will receive a dividend of four additional shares of common stock for each then-held share, to be distributed after close of trading on August 28.

Elon Musk's Tesla is set to make its shares more affordable to backers after announcing a five-way stock split, the first in its history, on the back of a record year of growth for the electric auto maker.

"The move makes sense for Tesla, as it will make its shares cheaper and more accessible to young first-time retail traders using platforms like Robinhood", said Jesse Cohen, senior analyst at Investing.com. At Tuesday's prices, that would value shares at about $US274. The split will be performed in a five-for-one fashion, meaning one stock will be split into five. Those shares will begin trading on August 31. At the time of writing, during after hours trade, it is sitting at $US1,463.23 per share.

Splitting Tesla stock was first discussed publicly on Twitter back in July.

Ideally, this should put some buying pressure on Tesla stock as smaller investors flock to buy, but, as always, nothing is guaranteed. Then, the price of the stock will be adjusted to 20 percent of the original price. Incidentally, those tweets also sent Tesla share prices rocketing at the time. Tesla's stock price has jumped 280% since March this year.

The electric vehicle manufacturer fixed August 21 as the record date for splitting the stock.

Shares rose as much as 6% in late trading Tuesday after the split was announced. It will be offering shareholders a four-for-one split.

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