Tesla Announces Stock Split

Tesla Announces Stock Split

over 3 years ago2 mins

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Investors will soon be getting a lot more Musk for their buck: Tesla announced a “five-for-one” stock split late on Tuesday, and its existing shares rose 7% on Wednesday ⚡️

What does this mean?

Every share a Tesla investor owns – currently worth around $1,500 apiece – will be replaced with five shares, each worth about $300 (all else equal). That might help woo investors who’ve been put off by the price of a single share, which has more than tripled so far this year. Then again, it hasn’t exactly put off many people so far: last month, nearly 40,000 traders who use Robinhood’s investing app bought Tesla shares in one four-hour window.

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Existing shareholders like them don’t need to do anything: their holdings will be updated at the end of the month 🚙 And since the electric carmaker will also update its per-share metrics, investors should easily be able to compare its past profits to future earnings.

Why should I care?

Apple announced a “four-for-one” stock split last month, perhaps in part because it was hoping its share price would jump if investors could buy in more easily. Since then – and even before the split’s happened – Apple’s stock has risen so far it’s become the world’s most valuable public company again 🍎 Tesla – already the world’s most valuable car company – might be looking for a similar uplift by winning over investors who bought its upstart rivals’ cheaper shares instead.

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Some online stock brokerages already let you buy fractional shares and get in on any dividends the company pays. But a fractional share doesn’t give you other rights that come with holding complete shares, like attending annual meetings and voting on company policies. That can be a dealbreaker for “institutional” investors – which is partly why lowering the price of a whole share is such a big deal.

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