Does This Stock Split Affect Tesla’s Business In Any Way
You might be wondering what impact Tesla’s stock split could have on its day-to-day operations, balance sheet, or operating income statement. The answer is, very simply, none whatsoever.
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.
Tesla’s share price and the number of shares it ultimately has outstanding have absolutely no impact on the company’s ability to produce and sell EVs or innovate. Although stock-split euphoria can, indeed, push the share price of imminent stock-split stocks higher in the short run, it’s going to be Tesla’s ability to grow its sales and profits, maintain its competitive advantages, and innovate, which’ll determine the direction its share price heads over the long-term.
A Tesla Model S charging. Image source: Tesla.
To Buy Or Not Buy Tesla Stock
In 2020, Tesla made history by surpassing Toyota to become the worlds most valuable automaker. Since March 2020, Teslas stock price per share has soared by a whopping 920%, boosting the firms valuation by 9 times. To put that in perspective, the company is now worth as much as all nine largest car companies globally combined.
To help you better determine whether Tesla stock is a buy or not, lets now look at some price-linked factors that have contributed to Teslas success.
The Trajectory After The Tesla Stock Split
In Q1 2022, Tesla reported quarterly revenue of $16.9 billion 42% YTY. Teslas Q2 2022 earnings beat most analysts expectations.
Tesla stock closed at $891.29 before the split on Wednesday. When the stock split occurred after market close that day, each investor gained about two additional shares. Shares of the all-electric vehicle maker seemed to catch on fire a bit in after-hours trading.
The stock opened on Thursday at $302 and closed at $296.07. In an after-hours snapshot Thursday, Tesla came in at $297, or +.47%. At this writing at 1:26 pm on Friday afternoon, Tesla was down slightly to $290.
In many cases, a stock split doesnt outperform the broader market until 13 years following the split. A study by Nasdaq points out that just announcing a stock split gave an average boost of 2.5% to a stock. That boost added to an average stock outperformance of almost 5% after one year.
Between 2017 and 2021, Tesla expanded at a compound annual rate of 46%. Based on analysts estimates, of $83.9 billion in 2022 sales, that growth rate will accelerate to 56% this year. In 2023, continuing that trend, the company could generate over $100 billion in annual revenue for the very first time.
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In July, Tesla stock underwent an impressive breakout over $250. The move helped kickstart an impressive rally to north of $300.
So far, Tesla shares have found resistance near the $315 area, just shy of the 61.8% retracement. That zone actually marks a short-term double top, while support is marked by rising uptrend support .
Essentially, Tesla stock has been consolidating its recent gains by trading in the $285 to $315 zone with rising support. From here, the key will be a break of the range either losing support or breaking out over $315.
More specifically, the shares are still struggling with the $300 level and the 200-day moving average. If Tesla trades below these measures, it will put uptrend support back to the test.
A break of this measure puts the August low in play near $279. Around that mark, the stock’s 10-week moving average also comes into play. Its a break of this zone that becomes concerning for the bulls.
Specifically, it opens the door down to the 50-day moving average. Below that puts the $250 breakout zone back in play, along with the 61.8% retracement of the current rally .
On the upside, a move over $300 puts $315 resistance back in play. If Tesla stock breaks out over this area, it opens the door to the 78.6% retracement up near $346, then $350-plus.
Tesla plays a big role in the market. That’s partly from its size, with a $910 billion market cap, and partly from a sentiment standpoint. Keep that in mind when trading this name.
Tesla Is A Story Stock
Tesla has been described as a story stock. A story stock is a stock whose value is determined by its favorable press coverage and future prospects, rather than by its net income, assets, etc. Often, with this kind of stock, the intrinsic value isnt reflected in its price, since it can still be high even when the fundamental elements disagree.
For example, in 2017, Tesla announced the roll-out of its Model 3 Sedan. Following this, a sharp increase of Tesla stock price occured, and Teslas market cap briefly surpassed both GM and Ford. Here, we see that the price increase wasnt a result of real event, but of a specific, envisioned future for the firm.
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When Will The Tesla Stock Split Officially Go Into Effect
Let’s start with the question that shareholders clearly care about the most: “When will Tesla’s forward stock split take effect?” The answer is …tomorrow. On Aug. 25, 2022, prior to the opening bell, Tesla’s shares will officially begin trading at their post-split price.
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. Don’t panic.
Tesla Stock Split History: How Many Times Has Tsla Split When Was The Last Time
TSLA is considering another stock split
Tesla stock is on the move Monday as investors look into its stock split history alongside a new announcement from the company.
The news from Tesla this morning are plans for a stock split. The electric vehicle company announced this via a Tweet and followed it up with an SEC filing. In that filing, it notes the split will come in the form of a stock dividend.
Tesla points out that its Board of Directors has already approved the stock split suggested by management. Now the company is waiting for shareholders to approve the stock split. A vote on the matter will take place at its 2022 Annual Meeting of Stockholders.
There are still some details about the stock split plans that we dont know about. That includes when the potential split could take place, as well as the ratio that would be used to split shares of TSLA stock.
Todays news also has some wondering about the stock split history of Tesla stock. In the companys decade of public trading, its undergone one other stock split. That took place in August 2020 and saw the EV company split one share into five shares.
So why exactly is Tesla considering a stock split? The likely reason is that it wants to open its shares up to a larger pool of investors. A split lowers the price of the stock and increases the total amount in circulation, all without hurting the companys market capitalization.
TSLA stock is up 5.4% as of Monday morning.
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What A Stock Split Means For Tesla
A stock split is a situation in which a company divides its stock into smaller pieces while lowering its price. For example, if Tesla stock is currently worth about $1,000 apiece, and the company has decided to do a two-to-one split, this means that twice as many shares will be available at half the price. That is, after the split, the investor will pay $500 per share.
In reality, the stock split doesn’t change much. The market value of the company remains the same. Those who already own shares will receive more shares after the split, but the total value of the securities will not change.
However, the split may make the expensive stock more attractive to investors with limited budgets. Many investors aren’t willing to pay $1,000 per share. But if the price falls to, say, $200 per security after the split, the average investor may already be thinking about investing.
Tesla Stock Split To Occur Aug 24 After Shareholders Approve Plan
Jaclyn is a CNET Money editor who relishes the sweet spot between numbers and words. With responsibility for overseeing CNET’s credit card coverage, she writes and edits news, reviews and advice. She has experience covering business, personal finance and economics, and previously managed contracts and investments as a real estate agent. Her tech interests include Tesla, SpaceX, The Boring Company and Neuralink.
Tesla announced the date for its long-awaited stock split in an SEC filing Friday afternoon. Shareholders will receive two additional shares per each owned at market close on Aug. 24. Tesla shares will then trade at the split-adjusted price when the stock market opens on Aug. 25.
Thursday evening, Tesla shareholders completed the vote to authorize the 3-for-1 stock split at the company’s annual shareholders meeting in Austin, Texas. The board of directors moved quickly to confirm the poll results and announce the stock split. Those who could not attend the meeting in person were able to cast their votes by proxy — or online — in the weeks leading up to the event.
Tesla closed at $864.51 on Friday. If the stock split were to occur at this price, it would result in an individual share price of $288.17, with three times as many shares in circulation.
Below we’ll explain what a stock split is, how it affects investors and the share price, and why companies would be interested in pursuing a stock split.
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How The Share Price Will Change
Tesla stock peaked at the end of 2021, hitting an all-time high of $1243 per share. Since then, their valuation has bounced back and was valued at $769 at the time of writing.
Experts’ estimates of the growth prospects for the stock are rather restrained. According to the consensus forecast at Yahoo Finance, the company’s share price will reach $933 a year.
At the same time, according to investing.com, analysts expect $863 per share.
Among those who are most skeptical about the company’s prospects is Citigroup: specialists at the bank predict a decline in shares to $137. JPMorgan Chase is almost identical to them, expecting $250.
Jefferies Group and Wedbush Securities have optimistic views on Musk’s company, with specialists believing that Tesla shares will rise to $1,400 in a year.
Other analysts are generally positive about the company’s prospects, predicting a correction shortly and that the stock will turn a profit over the next few years.
The company continues to build its ecosystem by investing in a network of charging stations, battery production, and merchandise, but it does not forget about its army of geek fans. Thus, in portfolios focused on the medium to long term, Tesla stock can be allocated a higher share than its weight in the S& P500 suggests, with the expectation that the company will continue to grow ahead of the market. However, it is also necessary to understand that the next 5 years will by no means be as fast-paced as the previous ones.
Tesla Stock Price Predictions In 1 2 5 And 10 Years
- If Tesla stock price predictions come to fruition, the bullish trend should progress in 2022. According to a Tesla stock price prediction by Wallet Investor, January 2022s opening price is $811, while the closing price for December 2022 is $1104.
- This uptrend is projected to continue in 2023, according to the Economy Forecast Agencys predictions. Starting the year at around $1,110, the stock price is expected to increase to $1,400 by the end of the year.
- Regarding more long-term Tesla stock price prediction, the next decade could substantially increase Teslas business. Wallet Investor predicts that the stock should cross the $2,000 threshold by the end of 2025, after opening the year at $1,711. The predicted closing price for December 2025 is $2,010.
- The most long-term Tesla stock price prediction we have is from investor Ron Baron, who believes Tesla should be worth $1.5 trillion by 2030. That said, note that these long-term forecasts are extremely approximate and are considered speculation. They shouldnt act as reliable investment advice.
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Tesla Stock: What The Chart Says After 3
- Publish date: Aug 26, 2022 12:09 PM EDT
On Thursday, Tesla stock began trading for the first time since its split. That follows stock splits from other Big Tech names, like Alphabet and Amazon .
Unlike Alphabet and Amazon, however, Tesla had already split its stock this decade: 5 for 1 in August 2020.
Alongside Ford , Tesla has been a strong performer lately. At the recent high, Tesla stock was up more than 50% from its low in May.
Thats even as the Musk-Twitter saga continues to press on and as drama around the potential sale builds.
Now that the stock has undergone the split, what do the charts look like from here?
What Usually Happens To A Stock After A Split
Stock splits usually trigger a rise in the price of shares, according toa Nasdaq study that examined stock splits at large companies between 2012 and 2018. Even the mere announcement of a stock split yielded an average 2.5% price increase for a stock, the Nasdaq found and a year after a stock split, shares saw an average price hike of nearly 5%.
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What Does The Stock Split Mean For Tesla
Typically a stock split signals optimism in a company. It also indicates confidence that the share price will eventually rise to a level near or surpassing where it stood before the split.
Recent performance of Tesla shares support such an interpretation. 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.
The company last month reported mixed second quarter earnings, which showed a decline in profit of nearly one-third from the previous three-month period in part due to production slowdowns at a factory in Shanghai amid COVID lockdowns.
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.
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.
Tesla Stock Price Target
The Tesla price chart suggest the price is quietly on the rise again, and the new Tesla stock price target is $1,000. Tesla stock price today per share is up 7.3% in 2021, way below Dow Jones Industrial Averages 14% increase and S& P 500s 19% rise. But after trading sideways for several months, Tesla stock has started making progress and is up more than 21% over between August and October 2021.
In fact, with Tesla stock price today at over $750, it could be poised to break through resistance on the way to more gains. Its undeniable that forces that had been contrived to keep Tesla stock from outperforming in 2021 are starting to dissipate.
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How Will Tesla’s Stock Split
For this stock split, Tesla and its shareholders will have to take a few extra steps compared with last time, when the board simply announced its decision on Aug. 11, 2020, and swiftly split the stock on Aug. 31, 2020.
Public companies are capped with respect to how many shares they’re allowed to have in circulation, which is enforced by the SEC. Tesla is near its limit after the last split and public offering and only has the bandwidth to issue a 2-to-1 split under current conditions without shareholder approval.
After that, the board of directors will vote to approve a stock split and likely announce it shortly after. The split will be completed by the issuance of a share dividend to stockholders. For example, in the 3-to-1 split, for each share you hold by the cutoff date, you’ll be issued two more shares on the day of the split. It’s important to note that this is a onetime share dividend, unlike recurring cash dividends that are familiar to many investors.
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Teslas Split Should Make It More Affordable
With its stock price approaching $1,000 per share, Tesla has had a hefty price tag for most retail investors for quite some time.
The 3-1 stock split should change all that, and it could spur more retail investment in the company.
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. In fact, more than 3,000 institutions own shares in Tesla.
This kind of ownership is good for the companyâs existing shareholders but doesnât help new investors get a slice of the Tesla pie.
A 3-1 stock split could ensure more mom-and-pop investors can own a piece of the electric vehicle giant.
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