Tesla Shares Explode After Stock Split is Announced

Shares of electric vehicle maker Tesla were exploding on Wednesday, seeing gains of over 13% at the close after the company announced earlier in the week that it would do a five-for-one stock split.

The split will not change anything fundamental about the stock. It lowers the cost of buying a single share and you can buy fractions of a share as a retail buyer.

According to the company’s press release, each stockholder of record on August 21, 2020 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, 2020. Trading will begin on a stock split-adjusted basis on August 31, 2020.

Shares of Tesla have been on a rally this year, seeing gains of over 500% in the last 12 months.
“Any value in the stock that’s created by this is false,” said CNBC’s Jim Cramer on “Squawk Box.”

“But I think the idea of getting newer, younger people involved into the stock market who aren’t just brainwashed to put money into index funds is terrific.”

“While stock splits don’t create value per se, and institutional investors are typically largely indifferent to them, Tesla’s stock price reacted very positively yesterday after the market close,” remarked Deutsche Bank’s Emmanuel Rosner in a note to clients. “This is likely because Tesla has a very large retail investor following, and the stock split essentially lowers the bar for small investors.”

Tesla’s highly-anticipated Battery Day is expected to be held on September 22, 2020.

CEO Elon Musk tweted this week, “One day soon, I will wear this outfit,” accompanied by a picture of actor Frank Bonner playing a character in a US sitcom wearing a plaid outfit.

The company’s Plaid powertrain is expected to be made available in late 2020 in the form of a 7-seater Model S offering.

Disclaimer: We have no position in Tesla Inc. (NASDAQ: TSLA) and have not been compensated for this article.