After seeing its share price rally for large parts of the past 12 months, elevating its market capitalization from $42 billion to more than $250 billion, Tesla announced a five-for-one stock split on Tuesday to “make stock ownership more accessible to employees and investors.” The electric car maker saw its share price skyrocket from $235 to $1,374 over the past 12 months, making it one of the most expensive stocks on Wall Street.
While not changing the market capitalization of the company splitting its stock, splits have proven effective in attracting individual investors, who tend to make small trades and shy away from expensive stocks. However, many online brokerages now let customers buy parts of shares, somewhat limiting the potential of splits in the age of online trading.
As is typically the case when a stock split is announced, Tesla shares soared after the announcement, as investors raced to be on the list of shareholders on the effective date, which is set for August 21. Tesla shares were up around 6 percent in early trading on Wednesday.
This chart shows Tesla’s share price since the company’s IPO in 2010.
