Intro
Tesla (TSLA) stock has gone through two stock splits since it has been pubicly traded on the stock exchange. Let's take a look at Tesla's stock split history, as well as what you need to know about potential future stock splits, and whether to buy Tesla stock before or after a split.
THE ESSENCE
- Tesla shares have gone through 2 stock splits since 2010
- The most recent one occurred in 2022, which was a 3-for-1 stock split
- There is no way to know when or if Tesla will carry out another stock split
Tesla stock split
Tesla stock split history
A stock split is when a company decides to increase the number of its shares by splitting each existing share into several new shares. It is usually done to boost the stock's liquidity, and make it more attractive to individual investors, as a stock split also reduces the price of each share proportionally.
So far, Tesla stock (TSLA) has gone through a total of 2 stock splits since 2010, when it was listed on the Nasdaq stock exchange. See the stock splits collected in the table below.
| Date | Split | Cumulative split |
|---|---|---|
| August 31, 2020 | 5-to-1 | 5-to-1 |
| August 25, 2022 | 3-to-1 | 15-to-1 |
At the time of writing, the most recent stock split occured on August 25, 2022 with a 3-to-1 split.
Also, the table shows that one Tesla share bought prior to August 31, 2020 would be equal to 15 Tesla shares today.
What is a 3-for-1 stock split?
A stock split increases the total number of shares in circulation of a company, without affecting the company’s market value. At the time of the 3-for-1 stock split at Tesla in August 2022, investors were allocated 3 new Tesla shares for each share they held at that time.
Meanwhile, a stock split reduces the price for each share: during this 3-for-1 split, the value of each Tesla share decreased from around $900 before to $300 after the split. As a result, the value of an investor's overall holding does not change, it simply increases the number of shares owned by the same value.
E.g. 10 Tesla shares worth $900 each equal the same as 30 shares worth $300 each: $9,000.
A stock split can make it more attractive for retail investors with smaller portfolios to invest in a stock. This is especially true if the brokerage they use for stock trading does not allow them to buy fractional shares (a smaller portion of one share).
Tesla stock split
When can you expect a Tesla stock split?
There is no way to know for certain when or if Tesla will choose to make another stock split in the future. Stock splits are decisions made by a company's directors, and are usually done to make shares more affordable for individual investors, by reducing the nominal share price.
- Before its 2010, 5-to-1 stock split, Tesla shares traded at approximately $2,250, which decreased to around $450 after the split.
- Meanwhile, the value of one Tesla share was around $900 before, and $300 after the 3-to-1 stock split of August 2022.
So in general, it can be said that it is more likely that Tesla will consider a share split if its stock price once again rises to a high enough level that the company believes the stock will not be as affordable for individual investors.
Keep up to date on the latest Tesla news to find out whether a stock split is being planned. Here are some trustworthy news sources to follow:
Tesla stock split
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 by 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 situation 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.
Buying stocks for the first time?
If you have your eye on Tesla shares as your first stock trade ever, 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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