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Business News/ Markets / Stock Markets/  Tesla shares to get more affordable. Key things to know about stock split
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Tesla shares to get more affordable. Key things to know about stock split

Tesla will split its stock on August 24 and trading will begin on a split-adjusted basis August 25

The Tesla logo is seen on a car at Tesla Motors' new showroom in Manhattan's Meatpacking District in New York City, U.S. (REUTERS)Premium
The Tesla logo is seen on a car at Tesla Motors' new showroom in Manhattan's Meatpacking District in New York City, U.S. (REUTERS)

Tesla shares are about to get less expensive as the company will be splitting its highly priced stock in a bid to make them more accessible to investors. Tesla will split its stock on August 24 and trading will begin on a split-adjusted basis August 25.

After the close of trading on August 24, investors will receive two additional Tesla shares for every one they owned as of August 17. In theory, that should drop Tesla’s share price by about two-thirds before trading starts on Wednesday to around $290. Tesla’s market value topped $908 billion as of Monday’s close.

Shares of Tesla have climbed about 25% since the electric-vehicle company announced plans June 10 to split its stock. Shareholders cleared a path for the stock split at their August 4 annual shareholders meeting, and the vehicle-maker unveiled the terms of the split August 5. While a split does not affect a company's fundamentals, it could buoy the share price by making it easier for investors to own the stock.

A stock split increases the number of shares that are outstanding by issuing more shares to the current shareholders. Stock split decreases the market price of the individual shares, however, does not result in changing the market capitalization of the company.

Stock splits do not make a company more valuable or more profitable, but the hope is the stock looks affordable to more investors. Tesla joins US stock market heavyweights Amazon and Google parent Alphabet who also split their high-priced stocks in 2022.

Tesla had earlier enacted a 5-for-1 stock split about two years ago on August 31, 2020, when the company's shares began trading on a split-adjusted basis.

Tesla chief Elon Musk has earlier said that the company aimed to hit a production run rate of 2 million vehicles per year by the end of 2022 and would continue building factories.

Tesla has factories in California and Shanghai and is ramping up two more in Austin, Texas and Berlin. Musk said Tesla might be able to announce an additional factory this year and he expected eventually to have 10-12 so-called gigafactories.

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Published: 24 Aug 2022, 09:06 AM IST
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