Tesla’s stock run leads to 5-1 share split

Tesla’s stock run leads to 5-1 share split

11 Aug    Finance News

Shares of Tesla Inc. surged more than 7% in the extended session Tuesday after the Silicon Valley car maker’s board approved a five-for-one split of the company’s stock.

The move was geared to “make stock ownership more accessible to employees and investors,” the company said. Tesla TSLA, -3.11% shares have more than tripled so far this year.

Each shareholder of record as of Aug. 21 will receive a dividend of four additional shares of common stock for each then-held share, to be distributed after the close on Aug. 28, Tesla said.

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Trading on a stock split-adjusted basis will begin on Aug. 31, it said.

Tesla shares have gained 229% this year, compared with gains around 3% for the S&P 500 SPX, -0.79% , and are up 485% in the past 12 months, compared with a 14% advance for the S&P in the same period.

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The shares have hit a string of closing records, most recently July 10’s $1,544.65 close.

Tesla twice this year surprised investors with a quarterly profit when Wall Street called for a loss; its second-quarter earnings, its fourth consecutive quarter of GAAP profit, put it on track to join the S&P 500.

The inclusion, expected to happen within a few months, would unleash a torrent of new money from countless exchange-traded funds, and be followed by pension, mutual and other actively managed funds in the U.S. and overseas, that track the large-cap benchmark or have size or other restrictions on which stocks to add to their holdings.

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Besides Tesla’s profitability, several analysts have praised Tesla’s cash reserves, the continued strong demand for its electric vehicles, its new factories being built in Texas and in Germany, and a “battery day” scheduled for Sept. 15 as well as the expected launch of the Cybertruck, its electric pickup.

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