The price of Tesla stock will be more accessible to a wider circle of individual investors after the entry into force of a stock split on August 31. The move follows the strong rise of Tesla stock over the past year, but does not fundamentally change the market value of the company and is not a barrier to potential inclusion in the S&P 500.
American electric car manufacturer Tesla (TSLA) in 2020 became the most valuable company in the world, surpassing companies with more than 100 years of history and a great reputation.
Tesla’s market capitalization at the close of trading on Tuesday amounted to $262,6 billion, surpassing the market valuation of Toyota in the amount of approximately $184,4 billion, General Motors (GM): $40,66 billion and Ford (F): $28,54 billion combined.
Tesla’s shares increased dramatically in price (an increase of 500% over the last 12 months and 228,5% from the beginning of 2020), but are below their recent high of $1640,5 per share July 20. At the close of trading Tuesday, the stock price of Tesla was $1374,39.
After the close of trading on Tuesday, the leadership of Tesla announced the stock split five to one: “Each registered shareholder on August 21, 2020 will receive a dividend of four additional ordinary shares for each activdriver at the time), which will be distributed after the close of trading on 28 August 2020. Trade adjustments will begin on August 31, 2020.”
According to a statement from Tesla, the move is aimed to “make owning shares more affordable for employees and investors.”
Wedbush analyst Dan Ives gave the following assessment of this decision, Tesla: “In a time when “appetite” for the shares and the common history of electric vehicles continues to gain momentum, I think this is a reasonable step.”
A stock split is nothing in them does not change, does not change the market value of the company and not Tesla makes a less expensive share from the point of view of the actual benefits that it brings through the payment of dividends.
The division of Tesla stock followed by stock split of four to one declared the Apple (AAPL) in late July – the first section shares of the iPhone maker 2014.
At the same time the stock split becomes less frequent practice among public companies, because most brokerage firms today provide an opportunity to buy just one share of Tesla, while the previous conditions have provided the lot size to trade at least 100 shares.
In addition, the investment platform Robinhood, for example, gives the opportunity to buy even part of one, the shares of Tesla investing any Deposit. According Robintrack, a website that tracks the assets of Robinhood, for the last 30 days Tesla was second only to Apple in popularity in trading app Robinhood.
To date, only three components of the S&P 500 announced the split in 2020, compared with an average of 10 per year over the last decade, according to S&P Dow Jones Indices.
The division of Tesla stock should not affect a potential decision of the Commission of S&P Dow Jones Indices on adding companies in the S&P 500 index that includes stocks of 500 publicly traded U.S. companies with the largest capitalization.
Marketinfo.pro in the article “When Tesla will be added to the S&P 500?” wrote that one of the probable timing of the inclusion of Tesla stock in the S&P 500 is September of this year, given the past statistics and the fact that this month the steering Committee organizes the quarterly meeting on rebalancing the index.
The addition of Tesla stock in the S&P 500 make them real “blue chip” followed by large flows of new investment into the company from exchange-traded funds, pension, mutual funds and other actively managed funds in the United States and abroad that seek to mimic the control index of stocks of large caps.
