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Tesla split its stock Here’s what that means

TSLA stock has been on an upswing since last month, posting its biggest gains since October 2021, and the announcement of the stock split does not take effect immediately. The Texas-headquartered company hasn’t specified the actual date of the stock split. If you’re thinking about getting a slice of Tesla’s stock, don’t let the potential stock split be the only number that’s driving your decision. There are more important factors to consider if you want a chance to profit from any stock you buy. As of August 25, a single share of Tesla should be considerably more affordable for everyday investors without access to fractional-share purchases through their online broker. For current and prospective Tesla shareholders, here’s everything you need to know about the company’s upcoming split.

  1. Investors received two additional shares for each share they held prior to the split.
  2. As a writer, Michael has covered everything from stocks to cryptocurrency and ETFs for many of the world’s major financial publications, including Kiplinger, U.S. News and World Report, The Motley Fool and more.
  3. For current and prospective Tesla shareholders, here’s everything you need to know about the company’s upcoming split.

But a stock split doesn’t necessarily mean that anybody’s getting anything of additional value with their money. A stock split will make Tesla’s four-figure stock price more affordable for the average investor. After the stock split, all investors can buy a whole share of Tesla for a cheaper price. If the company pursues a 5-for-1 stock split again, you’ll have 10 shares valued at $200 each if the stock price remains the same. Tesla’s common stock plunged from its record high in November 2021 and fell to a low in June of this year, when it began to stage a strong advance, approaching $1 trillion in market value.

The stock split has largely fallen out of fashion in corporate America. Shares, however, usually rise over the year following a split, according to a study conducted by Nasdaq. After the 3-to-1 split, Tesla’s shares were trading at about $302, a third of where they stood prior to market open. With the Tesla stock split now complete, here are five things investors should know following this much-anticipated split. While the EV market is growing at a rapid clip and creating high-margin business opportunities, it’s worth noting that the automotive industry has historically been very competitive and relatively low margin. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services.

Tesla stock set for 3-for-1 split after market close

Although investors are hyped up at the moment, a stock split doesn’t mask the fact that one of the most widely held stocks on the planet is facing a slew of headwinds. Something for current and prospective investors to keep in mind is that stock quote providers, and even some online brokerages, can take a couple of hours to perhaps even a full day to recognize that a forward stock split has taken place. It’s possible you might wake up and see a quote for Tesla down 65% to 70%. It’s also possible the value of your portfolio could plummet if your online brokerage hasn’t properly adjusted for the coming stock split and Tesla represents a sizable position. Either way, these are nothing more than data errors that should be corrected within 24 hours. But the far bigger worry here is that Musk’s forward-looking statements, which play a key role in buoying Tesla’s pricey valuation, have a history of missing the mark.

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Since the beginning of the year, dozens of companies have announced and/or enacted stock splits. Theoretically, the split means that more retail investors will be able to afford Tesla stock, but those investors are minuscule compared with institutional investors, and fractional shares were already available to smaller investors. The fourth thing to note, following the completion of the trader joe’s jobs indeed review at jobs Tesla stock split, is that the company remains exceptionally expensive, compared to legacy auto stocks. A 3-1 stock split could ensure more mom-and-pop investors can own a piece of the electric vehicle giant. Many experts assume the Tesla split will make the company’s stock more affordable to retail investors. Tesla (TSLA) has completed a 3-1 stock split for the company’s shares.

For example, if you owned 20 shares of Tesla at $890 per share as of this past weekend, your split-adjusted stake would be 60 shares of Tesla held (three times your existing position) at $296.67 per share (a third of the previous price). You’ll note that Tesla’s market cap doesn’t change despite the share price and outstanding share count being adjusted. Tesla also expects that reducing the share price through a stock split will make its common stock more accessible to retail investors, https://www.day-trading.info/best-penny-stocks-under-1-for-2021/ which it sees as a positive development. Conversely, Tesla’s share price will be reduced by a third following its August 24 close. Think of stock splits as nothing more than window dressing that allows companies to make their shares more accessible for retail investors. It’s also a way of encouraging higher average trading volume, which CEOs like Elon Musk understand can keep Tesla at the heart of the conversation on online message boards and within investing communities.

To add, stock splits have no effect on a company’s income statement or balance sheet, either. Tesla’s cash position, net income, and fundamental metrics, such as price-to-earnings ratio, are the same with its share price below $300 as they were when its stock traded near $900. Tesla (TSLA -1.15%) has garnered a lot of attention since its 5-for-1 stock split in 2020, and the light continues to shine on the electric vehicle maker. Last month, Tesla announced plans for a potential stock split, and the company’s share price shot up. To begin with, Tesla completing its second stock split in as many years is a boon to everyday investors who don’t have access to fractional share purchases with their online broker. In the blink of an eye, Tesla’s share price adjusted from close to $900/share to a little less than $300/share.

Tesla Stock Split: Everything You Need to Know About the Upcoming Split

Tesla’s annual meeting also had votes on eight proposals submitted by shareholders. The preliminary tally indicates that seven of them were rejected, as recommended by management. However, the preliminary results indicate that Proposal Six on the agenda, to increase shareholders’ ability to nominate competing candidates for board seats, passed.

Tesla’s last stock split, on a 5-for-1 basis, was implemented in August 2020. Investors will receive an additional two shares of Tesla for each one they already owned as of Aug. 17, 2022. Still, on the whole, the company’s shares have suffered a difficult 2022, falling more than 18% since the outset of the year. That drop is in line with each of the three major stock indexes, which have plummeted this year. When compared with the same quarter a year ago, Tesla profit had doubled and revenue had grown 42%, signaling strong growth over the long term.

Elon Musk remains the company’s greatest risk/liability

Pay attention to the key financial metrics, and then go beyond the numbers to determine if the company deserves a spot in your portfolio. If you do your research now, you can position yourself to attract market-beating returns that can get you one step closer to building wealth in the stock market over time. On the other hand, investors with little appetite for risk or volatility can safely steer clear of the stock, and it certainly wouldn’t be advisable to buy shares simply because of the upcoming split. EVs are an exciting, fast-growing market, but there could be some twists and turns ahead that prompt the market to reassess Tesla’s highly growth-dependent valuation. Tesla published its first-quarter earnings results earlier this month, and the business delivered another period of impressive growth.

He’s researched, written about and practiced investing for nearly two decades. As a writer, Michael has covered everything from stocks to cryptocurrency and ETFs for many of the world’s major financial publications, including Kiplinger, U.S. News and World Report, The Motley Fool and more. Michael holds a master’s degree in philosophy from The New School for Social Research and an additional master’s degree in Asian classics https://www.forexbox.info/time-series-analysis/ from St. John’s College. This kind of ownership is good for the company’s existing shareholders but doesn’t help new investors get a slice of the Tesla pie. Regarding institutional ownership, the stock is currently held by a wide range of different funds. At the time of this writing, Vanguard owned more than 65 million shares and Blackrock owned over 55 million, to name a couple of large institutional holders.

The company says that, unlike other manufacturers, it gives every employee the opportunity to receive equity. Tesla notes that, from its last split in August 2020 to the date of proxy statement on June 6, 2022, the price of its shares rose by 43.5%. Lastly, Tesla’s shareholders and prospective investors should understand that stock split-mania is a short-term event.

Automotive revenue surged by roughly 87% year over year to $16.86 billion, and its net cash flow from operating activities surged by 143% to nearly $4 billion. The EV leader produced 305,407 vehicles in the quarter and delivered 310,048, performance that represented year-over-year jumps of roughly 69% and 68%, respectively. Shareholders voted to approve the 3-for-1 Tesla stock split at the company’s annual meeting on Aug. 4 in Austin, Texas. Over the past month, Tesla stock has surged, rising more than 6% as of early trading on Tuesday. Prior to a drop over the past week, the stock had risen more than 13% since a month ago.

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