April 25, 2024

Tesla Shares Close Lower After Stock Split

On Thursday, Tesla Inc. saw its shares end the day lower by 2%, as the three-in-one stock split that the most valuable automaker in the world had announced for wooing retail investors went into effect.

Stock declines

Tesla’s stock began the day at a price of $302 but had come down to $296.07 by the end of the day. Thanks to the split, investors were able to receive two additional shares for every share they owned at August 17th.

On Wednesday before the split took place, the stock had ended the day at a value of $891.29. This is Tesla’s second stock split that the company has announced in as many years.

It is in line with other high-growth companies that also made similar moves, such as Google’s parent Alphabet Inc. and Amazon.com.

It had become necessary for the companies because their investor base needed diversification. Market analysts said that stock splits are very appealing to retail investors because it gives them affordable options.

They also said that retail investors are extremely important for Tesla and the recent tech split only makes this fact more evident.

Tesla’s background

Based in Austin, Texas, Tesla made its debut in 2010 at a value of $17 and it surged to a peak price of $2,000 in over a decade.

This made it one of the highest priced stocks on Wall Street and made it immensely difficult for small investors to place their bets on the high-growth stock.

Back in August 2020, Tesla had decided to split its stock for the first time and had gone for a five-for-one move. The company was able to go past the $1 trillion mark in 2021 when it comes to market capitalization.

According to market analysts, the electric vehicle maker is the sixth company part of the S&P 500 index to have decided to go for the stock split this year.

Share performance

The company’s ticker was trending on social media, which indicates that there was a lot of chatter about the stock amongst individual investors.

So far, there has been an 11% decline in Tesla’s stocks since March when the stock split was first announced by the company.

Market analysts said that it is typical for price momentum to slow down in the week of the stock split because investors tend to scale back their purchases drastically in the usual style.

The fundamentals of the company remain generally unaffected when a stock split happens, but it is beneficial for individual investors because it gives them room to make individual trades.

However, the advantages that these stock splits can offer are becoming less evident because brokerages already offer their customers the ability to buy parts of a company’s shares.

So far, Tesla’s stock has seen its value drop by 16% in this year because high-growth stocks have seen a huge sell-off.

This was primarily over worries about geopolitical uncertainties and aggressive hikes in the interest rate.

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