Tesla stock will begin trading at a 3-for-1 split-adjusted price on Aug. 25.
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Tesla has given investors something to look forward to: The electric-vehicle giant announced the date of its coming stock split.
Tesla (ticker: TSLA) said Friday that each stockholder of record on Aug. 17, will get a dividend of two new shares for each held after the close of trading on Aug. 24.
Shares will trade at the new, split-adjusted, price the next day, Aug. 25.
The record date and stock dividend are only details. The 3-for-1 stock split is, essentially, affected by passing out two new shares. And brokers manage all the details about who owns what and when for investors. There isn’t any arbitrage opportunity.
That doesn’t mean Tesla stock won’t move between now and then. Investors, and traders, like stock splits. Lower prices make shares easier to purchase for retail investors.
Retail investors matter for Tesla. About 46% of shares available for trading are held by non-institutional investors. Institutional investors are mutual funds or hedge funds that pay people to management money for other investors. The comparable number for, say, Alphabet (GOOGL) is 15%.
What’s more, stock splits — for bullish investors — are supposed to signal management’s optimism about the future. No company splits a stock that it expects to go down.
The last time Tesla split its stock — 5-for-1 back in August 2020 — shares rose an incredible 81% from the announcement to the share trading on a new split-adjusted basis.
It’s hard to see that repeating. For starters, investors have known about this split for months, and the shares have risen almost 25% over the past month and 40% since their May 52-week low.
The Nasdaq Composite is up about 9% over the past month and up 20% from its June 52-week low.
Still, with Tesla stock, investors can never be sure what will happen.
The shares were up about 1.6% in premarket trading Monday. S&P 500 futures rose 0.4%. Dow Jones Industrial Average futures also gained 0.4%.
The split isn’t the only thing helping Tesla stock. Congress passed the Inflation Reduction Act over the weekend. The bill includes purchase tax credits for electric vehicles.
Write to Al Root at [email protected]
