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Tesla splits shares to make it more affordable

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Tesla Inc. is splitting its elevated shares in a 5-for-1 exchange, a move timed to make the stock price less expensive for individual investors after becoming the world’s most valuable automaker. Its shares surged on the news in aftermarket trading.

Each shareholder of record on Aug. 21 will receive a dividend of four additional shares of common stock for each share, the Silicon Valley electric-car manufacturer said Tuesday. Trading will begin on a split-adjusted basis on Aug. 31.

The split is a time decision to capitalize on Tesla’s recent surge, which has pushed its valuation to around $256 billion, surpassing the value of Ford Motor Co. and Toyota Motor Corp. combined. With a price as as high as $1,643 in recent weeks, the shares are beyond the reach of many smaller stock investors just as the EV industry is capturing their imagination.

Analysts praised the move as a timely decision to capitalize on Tesla’s recent stock price surge.

“At a time where the appetite for the stock and overall EV story continues to gain momentum, I think it’s a smart move,” said Dan Ives, an analyst at Wedbush who rates the shares the equivalent of a hold. Tesla’s move follows a similar split by Apple Inc., which Ives said other tech giants are likely to emulate.

Apple announced a 4-for-1 stock split after the close on July 30 and retail traders have piled in to bet on further gains.

 

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