Tesla Stock Splits – All You Need to Know

Most shareholders like stock splits because they feel like they’re getting something extra without paying for it. But a stock split doesn’t mean you’re getting more value for your money. In 2022, Wall Street and regular investors faced many challenges. The S&P 500 and Nasdaq Composite, two important stock market indexes, went down a lot. The U.S. economy also shrank for two quarters in a row, and inflation was the highest it’s been in over 40 years. If you’re thinking about investing in Tesla or already have, here’s all you need to know about Tesla stock splits.

What is a Stock Split?

A stock split happens when a company takes its existing shares and makes more of them, which increases the total number of shares. This is done on purpose to lower the price of each share without changing how much the whole company is worth. In other words, it’s like cutting a pie into more pieces to keep the same amount of pie overall.

Tesla 3-for-1 Stock Split

Tesla split its stocks 3-for-1. This means that for every share an investor had before, they got two more shares. The split happened on August 17, 2022, after markets closed. The extra shares were given out after the closing bell on August 24. Tesla started trading with the adjusted split on August 25.

Why Tesla Is Splitting Its Shares

Tesla is splitting its shares so regular people can buy them more easily. Many experts think this will happen.

But Tesla’s stock is still down 28% this year. This is similar to the overall stock market. The Nasdaq Composite index, where Tesla is listed, is down 20%.

The split comes after some good news for Tesla shareholders. Senator Joe Manchin supports a bill in the U.S. Senate. This bill could give big tax credits to people who buy Tesla cars. Before, the credits stopped after a company sold 200,000 electric cars. But this bill would give the credits to people buying Tesla and General Motors (GM) cars.

When will Tesla’s stock split officially happen?

Let’s ask the main question that shareholders care about: “When will Tesla’s stock split take effect?” The answer is (drum roll) On August 25, 2022, before the stock market opens, Tesla’s shares will start trading at their new price.

Something for current and future investors to remember is that it might take a few hours, or even a whole day, for stock quote websites and some online brokers to recognize the stock split. You might wake up and see Tesla’s price drop by 65% to 70%. Your portfolio’s value might also go down if your online broker hasn’t adjusted for the split and Tesla is a big part of your investments. But don’t worry, these are just mistakes that should be fixed within a day.

Tesla’s Split Should Make It More Affordable

Tesla is making its stock cheaper by splitting it. Its stock price has been very high, nearly $1,000 per share, which made it hard for regular people to buy. But now, with the stock split, it should be easier for them to afford. This might encourage more regular people to invest in Tesla.

Big investment companies own a lot of Tesla stock. Vanguard and Blackrock are just two examples, with millions of shares each. Actually, over 3,000 different institutions own Tesla shares.

Having big companies own Tesla stock is good for the people who already own it, but it doesn’t help new investors. With the stock split, more regular people might be able to buy Tesla shares.

Will Tesla’s Business Change Due to the Stock Split?

You might be thinking about how Tesla’s stock split could affect its daily business, finances, or income statement. The answer is simple: it won’t have any effect.

Think of stock splits as just making the company’s shares easier for regular people to buy. It’s also a way to get more people to trade the stock, which CEOs like Elon Musk know can keep Tesla in the news and talked about by investors.

The price of Tesla’s shares and the number of shares it has don’t affect its ability to make and sell electric cars or come up with new ideas. Even though excitement about a stock split can make the price of the stock go up for a short time, in the long run, what really matters for Tesla’s stock price is how much it sells, how much money it makes, and how innovative it is.

Conclusion

In conclusion, when a company splits its stock, it doesn’t change how valuable the company is or how good of an investment it is. Stock splits don’t add any value and don’t affect how well the company does. Some people say stock splits can make share prices go up by attracting more regular investors. But generally, a stock split should make a company’s share price go up. With Tesla’s shares dropping a lot recently, anything positive could help. It’s not just the stock split though. UBS upgraded TSLA stock. These things could help Tesla do better in the future.

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