In a bid to offer more value to its retail investors and make it more affordable, Tesla has split its stock for the second time in two years. The 3:1 stock split means each stockholder of record on August 17, 2022 will receive two additional shares of common stock for each then-held share. This kicked in after closing trade on August 24.
This stock split was approved by the Tesla board of directors and the shareholders during the company’s 2022 Annual Meeting on August 4 . The Giga factory at Shanghai crossed a milestone recently as the millionth car rolled out from the factory on August 14 and took Teslas total number of cars to over 3 million.
Earlier, in August 2020, the company had decided to split its stock on 5:1 basis, and breached the $1 trillion in market capitalisation in 2021. The counter’s market capitalisation at the moment however stands north of $300 billion.
This stock split is not unique to Tesla. It follows a trend of high value stocks splitting to diversify investor base and offer mor evalue to retail investors. Several other entities like Google’s parent firm Alphabet, Amazon all went through share split in recent times.
The share price dipped below $300 level in early US trade on Thursday morning trade as the share split kicked in. Just to clarify for retail investors, the share split does not affect the fundamentals of the stock. Based on analysts offerings, the 12-month price target is around $314 level.
Incidentally, the Tesla shares debuted at $17 in 2010, rose to more than $1,200 after the stock split in 2020. However, the stock has fallen over 16 percent in the last one year as concerns about US rate hike and geopolitical tension continue to worry investors.
