Is It too Late to Invest in Tesla After its Stock Split?

The surge of Tesla stock seemed unstoppable. It achieved its all-time-high reaching its 880 price level in January. But it pulled back to 560 in March. The stock price is now in the 600 level.

The company now has over $582 billion market cap, making Elon Musk, who owns around 20% of Tesla, one of the richest persons in the world in 2021.

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?

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.

is it late to invest tesla stock split

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 600.

Unlike Tesla, Apple’s recent stock split was its fifth time in its history. Its market cap is now worth $2 trillion. Many investors are still bullish and going long for AAPL. The stock is one of the top tech stocks in the S&P 500, NASDAQ 100, and Dow Jones.

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.

As of June 3, 2021, there are over 9 million Tesla followers on eToro, a popular social trading platform. 18.43% of them are investors, and 98% of them have buy positions of Tesla.

In terms of customer satisfaction, Tesla owners are brand believers. The electric car company tops the list of J.D. Power, a global market research company’s latest 2020 APEAL Study. The study measures owner’s emotional attachment and level of excitement with their new car.

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 750. Some investors think it will reach $1,200.

4. First Mover of Electric Cars

Tesla is often referred to as the iPhone of Electric Car Makers. It is now bigger than Volkswagen, Ford, BMW, Ferrari, and General Motors combined in terms of market capitalization.

Tesla delivered 499,550 cars in 2020. Analysts expect Tesla to deliver 785,000 vehicles in 2021.

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, and planning to add another one in the central United States for its Cybertruck Gigafactory.

How to Buy Shares of Tesla Stocks for as Low as $50?

Some online trading brokers offer fractional shares (you can buy TSLA with $50 regardless of its stock price). That is very affordable and helpful for small investors.

We use eToro to buy the underlying asset for as low as $50 without paying any commission fee.

Disclaimer: I wrote this article myself, and it expresses my own opinion. This content is for information purposes only and should never be considered as professional advice. 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.

About Fehl Dungo

Founder of DailyPik, entrepreneur, and tech investor. I have a Degree in Accountancy and a background in Finance. I analyze stocks everyday. Copy my trades on eToro Connect with me on Facebook

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