Tesla stock splits: What you need to know

Written by
Tamás D.
Fact checked by
Adam N.
Updated
1d ago

Tesla (TSLA) has executed two stock splits since becoming a publicly traded company. A stock split is a routine market action that many companies resort to besides Tesla.

A stock split is essentially a technicality that will have close to zero impact on your existing Tesla shares. If you're thinking about investing in Tesla, focus on the company's fundamentals and business performance; stock splits typically don't sway investment decisions.

What you need to know

I have researched thousands of financial topics over the last 5 years, and I think this is what you need to know about the Tesla stock split.

  • Stock splits are routine market actions.
  • The split should not have a big impact on your brokerage account.
  • It makes little difference whether you buy Tesla stocks before or after a stock split.
  • If you want to buy TSLA stocks, check out our step by step guide

A stock split is a routine market action

A stock split is when a company decides to increase the number of its shares by splitting each existing share into new shares. It is usually done to boost the stock's liquidity and make it more attractive to individual investors, as a stock split reduces the price of each share proportionally.

Stock splits increase the total number of shares in circulation, without affecting the company’s market value. So far, Tesla stock (TSLA) has gone through with 2 stock splits since 2010 when it was listed on the Nasdaq stock exchange. 

Check out the following table for more details on previous Tesla stock splits.

Tesla stock split history
Date Split Cumulative split Price before the split Price after the split
August 31, 2020 5-to-1 5-to-1 2.250 $ 450 $
August 25, 2022 3-to-1 15-to-1 900 $ 300 $

At the time of the 3-for-1 split in August 2022, investors were allocated 3 new Tesla shares for each share they held at that time as the value of each share decreased from around $900 to $300.

As a general rule, the value of an investor's overall holding does not change when a stock split take place. It simply increases the number of shares owned by the same value.

It's uncertain when Tesla will decide on another stock split, as it depends on the company's directors and the stock's price. Generally, Tesla may consider a split if its stock price becomes too high for individual investors.

Is there an impact on brokerage accounts?

When a split happens, the number of Tesla shares you own may increase, but the total value remains the same. So, it can impact how your brokerage account displays your holdings.

Apart from the change in the number of shares and how they're displayed in your brokerage account, there usually isn't any other impact.

Typically you won't need to pay more fees just because you have more shares after a stock split. Fees are usually based on the value of your investment or the number of transactions you make, rather than the number of shares you hold. So, the split itself shouldn't directly increase your fees.

There might be some exceptions, as certain brokers calculate the fees based on your total amount of shares.

When is a good time to buy Tesla stock?

There is no definitive answer as to whether you should buy Tesla stock before or after a stock split.

A stock split does not in itself have any impact on a company's fundamentals. In general, stock splits are a neutral event that do not have a significant effect on the financial performance or overall value of a company.

Therefore, you should not place too much importance on the timing of a stock split when deciding whether to buy or sell Tesla stock. Instead, focus more on your research and analysis of the company's financial health, performance and growth potential.

However, stock splits can lead to higher liquidity and trading volume, which could make it easier for investors to buy or sell shares.

The above chart shows the TSLA share price which is driven by fundamentals in the long run. In case of a split you would not see any major change on this chart regarding long-term trend. Also you would not see the price change as these charts are adjusted for splits.

Buying stocks for the first time?

If you have are considering buying Tesla shares as your first stock trade, use our dedicated step-by-step guide to make the process smooth and easy. We'll help you invest in stocks on your own in no time!

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Further reading

Author of this article

Tamás Deme

Money Story Magician | Investment • Stock market • ETFs

With over two decades of experience as a financial journalist, proofreader, copy editor, and editor, my mission revolves around making financial knowledge accessible to all. I firmly believe in the power of clear and straightforward writing. My past roles include contributing to Interfax news agency and covering M&A deals for EMIS DealWatch.

Everything you find on BrokerChooser is based on reliable data and unbiased information. We combine our 10+ years finance experience with readers feedback. Read more about our methodology.

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