over 3 years ago • 2 mins
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 ⚡️
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.
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.
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.
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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