If you’re thinking about getting a slice of Tesla’s stock, don’t let the potential stock split be the only number that’s driving your decision. There are more important factors to consider if you want a chance to profit from any stock you buy. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. Tesla published its first-quarter earnings results earlier this month, and the business delivered another period of impressive growth. Automotive revenue surged by roughly 87% year over year to $16.86 billion, and its net cash flow from operating activities surged by 143% to nearly $4 billion. The EV leader produced 305,407 vehicles in the quarter and delivered 310,048, performance that represented year-over-year jumps of roughly 69% and 68%, respectively.
Over the past month, Tesla stock has surged, rising more than 6% as of early trading on Tuesday. Prior to a drop over the past week, the stock had risen more than 13% since a month ago. Investors who held Tesla stock on Aug. 17 will be eligible to receive the additional shares. The stock split has largely fallen out of fashion in corporate America. Shares, however, usually rise over the year following a split, according to a study conducted by Nasdaq.
- If you’re thinking about getting a slice of Tesla’s stock, don’t let the potential stock split be the only number that’s driving your decision.
- Wall Street and the investing community have been dealt a difficult hand in 2022.
- The company is just slicing every share in your portfolio into smaller pieces.
- When a company announces a stock split, all shareholders on the books before the cutoff date will receive more shares of the company’s stock.
- It also indicates confidence that the share price will eventually rise to a level near or surpassing where it stood before the split.
Although investors are hyped up at the moment, a stock split doesn’t mask the fact that one of the most widely held stocks on the planet is facing a slew of headwinds. Something for current and prospective investors to keep in mind is that stock quote providers, and even some online brokerages, can take a couple of hours to perhaps even a full day to recognize that a forward stock split has taken place. It’s possible you might wake up and see a quote for Tesla down 65% to 70%. It’s also possible the value of your portfolio could plummet if your online brokerage hasn’t properly adjusted for the coming stock split and Tesla represents a sizable position. Either way, these are nothing more than data errors that should be corrected within 24 hours.
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Tesla’s last stock split, on a 5-for-1 basis, was implemented in August 2020. Still, on the whole, the company’s shares have suffered a difficult 2022, https://www.forex-world.net/ falling more than 18% since the outset of the year. That drop is in line with each of the three major stock indexes, which have plummeted this year.
A “stock split” is what allows a publicly traded company to alter its share price and outstanding share count without affecting its market cap or operations. Forward stock splits help reduce the share price of a stock, while a reverse stock split can increase a publicly traded company’s share price. Forward stock splits are what usually get investors excited, because a company wouldn’t be enacting a split if it weren’t executing well and out-innovating its competition. One of the most important things to recognize about forward and reverse stock splits is that they have no effect on the operating performance of a publicly traded company. Adjusting the share price and outstanding share count amounts to window dressing.
The company is just slicing every share in your portfolio into smaller pieces. Investors received four additional shares for every one share held in their portfolio. From the time of the stock split announcement on Aug. 11 to the 5-for-1 stock split on Aug. 31, Tesla’s stock price soared 80%. Although those returns were impressive, that doesn’t necessarily mean the next potential stock split will yield the same results. Lastly, Tesla’s shareholders and prospective investors should understand that stock split-mania is a short-term event.
If there’s a key takeaway from this figure, it’s that Tesla’s share price is predominantly being driven by buyers and sellers — not short-selling or short-covering. While things have certainly not gone Wall Street’s way in 2022, the investing community has still managed to find a bright light amid a gloomy situation. This has been a challenging year in every sense of the word for Wall Street professionals and everyday investors. The cherry on top is the Federal Reserve is aggressively hiking rates into a steeply correcting market for the first time ever.
When the Tesla stock split will take place
Tesla is currently valued at roughly 4.4 times the combined market capitalizations of General Motors, Ford, and Volkswagen. Tesla has been posting sales and earnings growth that dramatically exceeds that of its main industry rivals, but on the top and bottom lines, it still trails significantly behind each of these companies. For instance, Musk’s possible acquisition of social media platform Twitter represents the latest in a long history of questionable decision-making by a CEO who should be focused on the world’s most valuable auto brand.
A stock split will make Tesla’s four-figure stock price more affordable for the average investor. After the stock split, all investors can https://www.forexbox.info/ buy a whole share of Tesla for a cheaper price. Nothing is set in stone until shareholders vote at the upcoming shareholder meeting.
The world’s most valuable automaker announced its intent to conduct a split in June, and with shareholder approval, it moved forward with a 3-for-1 stock split on Aug. 25, 2022. In its proxy statement, Tesla stated that attracting and retaining top talent is the primary motivation for seeking to split its common stock. The company says that, unlike other manufacturers, it gives every employee the opportunity to receive equity. Tesla notes that, from its last split in August 2020 to the date of proxy statement on June 6, 2022, the price of its shares rose by 43.5%. Like most auto stocks, Tesla is contending with semiconductor chip shortages and generalized parts shortages predominantly caused by the COVID-19 pandemic.
When compared with the same quarter a year ago, Tesla profit had doubled and revenue had grown 42%, signaling strong growth over the long term. Investors will receive an additional two shares of Tesla for each one they already owned as of Aug. 17, 2022. Wall Street and the investing community have been dealt a difficult hand in 2022.
To begin with, Tesla completing its second stock split in as many years is a boon to everyday investors who don’t have access to fractional share purchases with their online broker. In the blink of an eye, Tesla’s share price adjusted from close to $900/share to a little less than $300/share. In other words, investors wanting to take a stake in Tesla can https://www.day-trading.info/ now do so with a considerably smaller amount of money. Shareholders of Tesla, Inc. (TSLA) approved a 3-for-1 split of the company’s common stock at its annual meeting held after the close of the markets on Aug. 4, 2022, according to a preliminary tally announced at the meeting. A final count will be issued on SEC Form 8-K within four business days.
The best move you can make is to invest in a company based on the health of the underlying business. When you purchase stock in a company, you are essentially buying a piece of the business, so you want to make sure the business can attract profits in the future. Tesla (TSLA -2.32%) has garnered a lot of attention since its 5-for-1 stock split in 2020, and the light continues to shine on the electric vehicle maker.
How many extra shares will you own?
Exact details about the plan were scarce, but the filing did indicate that the move would pave the way for CEO Elon Musk’s company to begin paying a dividend. Although Tesla has been known to divide the investing community into die-hard optimists and feet-on-the-ground skeptics, it’s worth pointing out that Tesla’s stock split kept the pessimists firmly on the sidelines. With the Tesla stock split now complete, here are five things investors should know following this much-anticipated split.
Effectively, this would reduce the company’s share price to a third of its current value while increasing the company’s outstanding share count by a factor of three. At the August 4 shareholder meeting, Tesla’s shareholders voted to approve the company’s proposed split. According to data from Fidelity, 212 public companies have announced and/or enacted stock splits since the beginning of the year. This includes one of the largest and most-popular stocks on the entire planet, electric-vehicle (EV) manufacturer Tesla (TSLA -2.32%).
In Tesla’s case, its share price will fall to a third of its current value, while its outstanding share count will triple. But for retail investors without access to fractional-share purchases through their online broker, reducing the share price from almost $920 to just over $306 will be a big deal. It’s a lot easier for everyday investors to set aside around $300 to buy a single share of Tesla than it would be to gather $900 for one share, as of the time of this writing. Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, top-rated podcasts, and non-profit The Motley Fool Foundation.