Please ensure Javascript is enabled for purposes of website accessibility

Tesla Share Split Becomes Official Today

By Lou Whiteman – Updated Aug 31, 2020 at 8:56AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors today own a lot more shares, but the underlying value of their investment should not change.

Shares of Tesla (TSLA -0.19%) on Monday will trade at a price much lower than Friday's close. But that's no reason for investors to panic.

The automaker's previously announced 5-for-1 stock split is set to take effect at the opening bell, meaning that holders will own five shares for each share they held prior to the opening. The price will be adjusted accordingly: Tesla closed at $2,213.40 on Friday, which is $442.68 per share following the split.

Tesla's Model Y on a sand track.

Image source: Tesla.

Tesla shares have had a great year, soaring 430% so far in 2020, and the split could add to that momentum. Although the underlying value of the company and its shares are not altered by the split, some investors anchor in on share prices, and the lower price could attract additional interest.

There's a lot of growth baked into Tesla's current valuation. The company's $417 billion market capitalization is nearly double that of larger automaker Toyota Motor, and currently values Tesla at more than $1 million per vehicle delivered during the previous 12 months.

Tesla is one of two large Silicon Valley companies that have announced stock splits, with Apple also doing a 4-for-1 split on Monday. Shares of both companies have rallied since the splits were announced, with Apple shares up by 30% and Tesla shares up by more than 60%.

Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple and Tesla. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Tesla Stock Quote
Tesla
TSLA
$182.86 (-0.19%) $0.34

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
356%
 
S&P 500 Returns
118%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.