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Tesla splits its stock in 3:1 ratio to offer more value to retail investors 

The 3:1 stock split means each stockholder will receive two more shares of common stock for each previously held share.

To offer more value to its retail investors and make it more affordable, Tesla has split its stock for the second time in the span of two years. The 3:1 stock split means each stockholder of record on August 17, 2022, will receive two more shares of common stock for each previously held share. This kicked in after closing the trade on August 24.

This stock split was approved by the Tesla board of directors and the shareholders during the company’s 2022 Annual Meeting on August 4. The Giga factory in Shanghai crossed a milestone recently as the millionth car rolled out from the factory on August 14 and took Tesla’s total number of cars to over 3 million.

In 2020, the company decided to split its stock on a 5:1 basis and breached the $1 trillion in market capitalization in 2021. However, the counter’s market capitalization currently stands north of $300 billion.

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This stock split is not unique to Tesla. It follows a trend of high-value stocks splitting to diversify the investor base and offer more value to retail investors. Several other entities, like Google’s parent firm Alphabet and Amazon, recently went through a share split.

The share price dipped below the $300 level in early US trade on Thursday morning as the share split kicked in. For retail investors, the share split does not affect the stock’s fundamentals. Based on analysts’ offerings, the 12-month price target is around the $314 level.

Incidentally, Tesla shares debuted at $17 in 2010 and rose to more than $1,200 after the stock split in 2020. However, the stock has fallen over 16 percent in the last year as concerns about the US rate hike and geopolitical tension continue to worry investors.

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Sahil Pawar
Sahil Pawar
I am a graduate with a bachelor's degree in statistics, mathematics, and physics. I have been working as a content writer for almost 3 years and have written for a plethora of domains. Besides, I have a vested interest in fashion and music.

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