Tesla, an American EV & clean energy company, has recently announced its five-for-one stock split. The company will begin trading on a stock split-adjusted basis on 31st August.

The shares of the vehicle manufacturer have increased by more than 6% in the post-market trading, despite no changes in the underlying fundamentals of the company following the recent stock split. The move will provide an advantage for the small investors to purchase its stock. However, these investors are minuscule as compared to the major institutions. In order to enable these small traders to purchase a few expensive stocks, various brokerages also currently offer fractional trading.

Tesla’s shares have surged almost 3x in 2020, up by 228.54% year-to-date. In the 2nd quarter earnings of the company, it reported a 4th straight quarter of gaining high profits, which has led to its qualification to join the S&P 500.

Currently, the company is 23.43% below $1,794.99, which is its all-time intraday high that was hit on 13th July.

In addition to Tesla, a technology company, Apple, also has announced its stock split on 30th July. During its recent Q3 earnings results, the company had announced the approval of its four-for-one stock split by the Board of Directors. Existing investors will obtain 3 additional shares following the close of the market on 24th August. Its shares have been trading nearly $400 in the after-hours. When it starts trading on the split-adjusted basis on 31st August, the new price for the stockholders will be over $100. It has commented on the stock split by stating that the move will make the company’s stock more accessible to a wide range of investors.

For instance, during the tech bubble, various companies have enacted the stock splits. Apple also had enacted stock split in the past, with the most recent split in 2014.

Source credit:

https://www.cnbc.com/2020/08/11/tesla-announces-five-for-one-stock-split.html