Tesla announces 3-for-1 stock split

Tesla Inc announced a three-for-one stock split on Thursday, a move that is designed to diversify the company’s investor base and make it easier for individual investors to buy shares in small trades.

Shares of the electric vehicle maker slipped a bit when the announcement was made, opening at $302 and dropping to $293 during early trading. The stock closed at $891.29 on Wednesday leading into the split.

This is the second time Tesla has split its stock, following a five-for-one split in August of 2020. Tesla is the sixth company in the S&P 500 index to split its shares this year, according to senior index analyst Howard Silverblatt. Both Amazon.com and Google-parent Alphabet have done so recently.

“Retail investors are a very important cohort for Tesla, and today’s stock split is essentially an acknowledgment of that fact,” said Art Hogan, chief market strategist at B. Riley.

Tesla stocks debuted at around $17 a share when the company hit the market in 2010. Shares quickly rose to more than $2,000 at their peak, putting the EV company among the highest priced on Wall Street and putting Tesla stock out of reach for many smaller investors.

While a stock split does help individual investors afford whole shares in a company, many brokerages already let customers buy fractional shares.

Tesla shares fell around 11% since March following the announcement of plans to increase its number of shares. Analysts from Vanda Research said it’s common for investors to scale back purchases of splitting stocks in the weeks leading up to the effective split date.

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