Discussion: Tesla is splitting stocks again! Can you replicate the previous spike?

富途資訊 ·  06/13/2022 17:44

Finally waiting for you!$Tesla, Inc. (TSLA.US) $The stock is going to be split again.

On June 10, US Eastern time, Tesla, Inc. submitted a document to the Securities and Exchange Commission.It said the company plans to carry out a 1:3 split and will discuss the proposal to pass the split at the shareholder meeting in August.It is worth noting that if this proposal is passed, it will be Tesla, Inc. 's first split since August 2020.

Tesla, Inc. 's share price, which closed down more than 3 per cent on Friday, rose quickly in after-hours trading, rising more than 2.5 per cent at one point after the announcement of the split plan. In fact, Tesla, Inc. disclosed plans to split shares as early as March, when the company's share price soared 8 per cent.


The split will not change the fundamentals, but it may increase liquidity. Judging from past experience, stock splitting usually stimulates share prices to rise.

Specifically, Tesla, Inc. split his shares once two years ago.


On August 11, 2020, Tesla, Inc. announced that the stock would be split at 1:5, and the adjusted stock would begin trading on August 31, 2020. Tesla, Inc. rose 37 per cent in a week as soon as the split was announced.

Tesla, Inc. closed up 12.57 per cent on August 31st. However, the strong upward momentum did not stop there. After the split, Tesla, Inc. continued to soar from around US $400 per share, rising nearly 80% in the next five months, becoming the locomotive of the entire US technology stocks and even the global electric vehicle-related industry chain.

Some analysts saidIn theory, stock split is only a technical operation, but it can lower the stock price and attract more individual investors to buy.This is especially true for technology stocks with high stock prices today.

In addition, psychological factors may also play a role, such as making it easier for individual investors to hold shares in companies they like. After all, high stock prices are always prohibitive.


Can this time repeat the strong trend after the last split?

In 2022, with inflation soaring and the Federal Reserve raising interest rates, US stocks pulled back sharply, with technology stocks particularly hard hit. Rising inflation and rising interest rates are expected to depress demand for technology products and services while undermining the attractiveness of highly valued technology companies.

Tesla, Inc. had fallen more than 34 per cent for the year as of Friday's close, driven by a number of negative factors, such as excessive valuations, production recovery lagging behind orders, and investors worried about Mr Musk's acquisition of Twitter.


With regard to Tesla, Inc. 's split, Wedbush analyst Daniel Ives said earlier that given the sharp rise in Tesla, Inc. 's share price in 2020, it is not surprising that it has embarked on the road of stock split again, especially given the strong demand for electric cars and the construction of super factories in Berlin and Austin.

We believe that Tesla, Inc. 's second round of stock split within two years is a very wise strategy and will become a positive catalyst for the stock price to move forward.

But some analysts believe that the split is a good time to quit.Investment research firm New Constructs believes that Tesla, Inc. 's stock split does not change the fact that the trading value of his stock is completely out of line with the fundamentals.It may even further aggravate the "Tesla, Inc. bubble" that has been brewing in the past two years.Because the sharply lower price after the split may be more attractive to "unguarded" individual investors.

17.pngTesla, Inc. split the shares this time

Can you replicate the last boom?

Is it worth buying before the split?

Will the "cheap" Tesla, Inc. be attractive to you?

Welcome to the comment area to have a chat.

Edit / Corrine

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