Tesla shares surge after Elon Musk announces stock split
Tesla shares soared in premarket trading Wednesday after Elon Musk’s electric car-maker announced a 5-for-1 stock split.
The company plans to give investors five shares of stock for each share they own on Aug. 28 in an effort “to make stock ownership more accessible to employees and investors,” it said after Tuesday’s closing bell.
The move will divide Tesla’s stock price — which had jumped nearly 6.6 percent to $1,465.00 by 7:30 a.m. Wednesday — by five without reducing its market value, currently the largest of any automaker in the world.
“Given its lofty stock price a stock split makes a ton of sense, especially at a time in when the appetite for Tesla’s stock and [the electric vehicle] market is robust among retail investors globally,” Wedbush Securities analyst Daniel Ives told The Post.
Tesla’s share price has increased sixfold over the past year as the company opened a new factory in China, beat expectations for vehicle deliveries and posted four straight profitable quarters despite disruptions from the coronavirus pandemic, making it eligible for inclusion in the benchmark S&P 500 stock index.
Tesla CEO Musk — who is paid in performance-based equity awards — has opined that his company’s stock price is “too high” even though the recent surge has added $37.8 billion to his wealth so far this year. He’s currently the world’s 10th-richest person with a fortune of $65.4 billion, according to Bloomberg’s Billionaires Index.
Companies often use stock splits to make their shares cheaper and more attractive to small investors. But they’ve become relatively uncommon among big US companies — only three S&P 500 firms have announced them this year, including Apple, which will execute a 4-for-1 split at the end of this month.
Both Tesla and Apple are hot stocks among retail traders. They’ve seen the biggest increases in popularity over the past month among Robinhood investors, according to Robintrack, which compiles data from the trading app.
With Post wires
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