Tesla is among the most controversial stocks. Any news or tweet can skyrocket its price per share. On the other hand, it can also do the opposite.
The company now has over $500 billion market cap, making Elon Musk, who owns around 13% of Tesla, one of the richest persons in the world.
Tesla shares climbed to the moon after its stock split announcement. Apple announced its stock split before Tesla, and its stock has been bullish after that. Then, it became the first US company to reach 2 trillion market cap. Will Tesla reach its trillion-market cap this year?
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Recent Tesla Stock Split Highlights:
- On August 31, 2020, Tesla split its stock 5 to 1
- Meaning, for every TSLA share held, an investor received 4 additional shares in the form of dividends
- Each would be valued at a fifth of the price
What is a Stock Split?
A stock split happens when a company decides to divide the existing shares of its stock to decrease the market price of individual shares. That way, the number of shares outstanding (shares sold to investors) will increase and could enhance liquidity.
Why Tesla and Apple were doing stock Splits?
Since a stock split reduces the price per share of a given stock, it becomes more affordable for investors. Tesla reported in a statement that the split was intended to “make stock ownership more accessible to employees and investors.”
Tesla stock reached its 2,000 price level (before the split), and it looks so expensive for many investors. Not every investor has $2,000 to buy one share of TSLA. Many analysts also consider the stock to be overvalued. After the 5 to 1 split, TSLA stock price lowered down to approximately 400 per share. Now, it’s around $164.
Is it better to Buy a Stock Before or After a Stock Split?
Although a stock split makes the stock price cheaper, it doesn’t change the market value of the company. Nobody can ever tell the exact effect of the split to the company’s stock price. However, according to Bespoke Investment Group, between 2015–2020, stocks of companies that announced splits, gained an average of 2.3% between the time they announced the split and the time it took place.
5 Reasons Why You Should Invest in Tesla Even After the Stock Split
1. Solid Fan base
You love them, you hate them, but Tesla has an incredible fan base, especially individual investors. In terms of customer satisfaction, Tesla owners are brand believers.
2. Tesla Joined the S&P 500
The affordable price of TSLA after the stock split attracted more investors on board and spiked its market cap to new highs. It could happen again after a new catalyst.
Tesla is now one of the top stocks on the NASDAQ 100 index and then later joined the S&P 500. Being listed in an index could boost TSLA stock price because many pooled investment houses like ETFs track stock market index.
3. Attractive Price
Although a stock split doesn’t change the market value of Tesla, more individual investors can afford to buy more shares now. Many think it’s fair to buy as long as it’s below 200. Some investors think it will reach $210.
4. First Mover of Electric Cars
Tesla is often referred to as the iPhone of Electric Car Makers. It even surpassed Volkswagen, Ford, BMW, Ferrari, and General Motors combined in terms of market capitalization in the past.
5. Accelerating Growth
Tesla is not only an electric car company. It also produces solar power systems and battery charging equipment. The company is expanding its manufacturing power to reach global markets. It has gigafactories in Nevada, New York, Shanghai, Berlin, Texas, and California
Disclaimer: This content is for information purposes only and should never be considered as professional advice or endorsement of any stock. Every investor has a different risk tolerance and goal. Always do your own research. All investments have risks. Risk only the money you’re not afraid to lose.
