Tesla plans stock split after price soars

Tesla is planning a 1-to-5 stock split after the price of its shares skyrocketed, making it more difficult for retail investors to buy into the company.

Claudia Assis reported the news for MarketWatch:

Shares of Tesla Inc. surged more than 7% in the extended session Tuesday after the Silicon Valley car maker’s board approved a five-for-one split of the company’s stock.

The move was geared to “make stock ownership more accessible to employees and investors,” the company said. Tesla TSLA, -3.11% shares have more than tripled so far this year.

Each shareholder of record as of Aug. 21 will receive a dividend of four additional shares of common stock for each then-held share, to be distributed after the close on Aug. 28, Tesla said.

Noel Randewich and Munsif Vengattil from Reuters wrote:

Tesla’s stock has surged over 200% this year, while shares of General Motors and Ford Motor declined on fallout from the coronavirus pandemic.

Stock splits are a way for companies to make shares more accessible to retail investors, potentially attracting individual investors who make small trades. However, brokerages increasingly let customers buy parts of shares, making the benefit of share splits less clear than in the past.

CNN’s Clare Duffy noted:

Tesla’s stock is on a roll this year, despite challenges presented by the coronavirus pandemic. Shares have risen more than 200% since January to $1,374, and its market capitalization has surpassed the likes of Disney (DIS), Toyota (TM) and Coca Cola (KO).

Apple (AAPL) also announced a stock split last week — its stock has climbed more than 45% this year. The two companies’ success mirrors the overall strong performance of the tech sector in a year that has been turbulent for Wall Street.