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Tesla stock is about to get much cheaper

The company announced on Friday that its board of directors had approved a 3-for-1 stock split, its first split since August 2020. The split is expected to be approved by shareholders at the company’s annual meeting in August.
You’re here (TSLA) closed Friday at just over $696 per share. If the split were to take place today, its stock would be worth $232 per share.

Don’t worry, Tesla shareholders (that’s pretty much everyone with a retirement account these days) — your stakes will still be worth the same. You own three times as many shares when all is said and done.

Companies split their shares for many reasons: Splits can make their shares available to smaller individual investors. This helps companies gain cash, and splits can create greater demand for a company’s shares.

While deep-pocketed institutional investors don’t care about the company’s overall stock price, individual investors may be put off by high-priced stocks. The growth of no-fee trading apps, including Robinhood, E-Trade and others, has made stock splits much more prominent in recent years.

Tesla said it took those factors into consideration, as well as employees who are paid in company stock.

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“We believe the stock split would help reset the market price of our common stock so that our employees have more flexibility in managing their equity, which we believe can help maximize value for employees. shareholders,” Tesla said in a regulatory filing. Friday. “Furthermore, as retail investors have expressed a high level of interest in investing in our shares, we believe the stock split will also make our common stock more accessible to our retail shareholders.”
Tesla announced plans for a spinoff in March, but did not announce a ratio. On Friday, he noted that his stock has risen 43.5% since his last stock split nearly three years ago, although shares have fallen 30% since those split plans were announced. He might have expected to have a bigger stock split if it hadn’t fallen so much.
This year, as Big Tech and the broader market have been hurt by inflation and rising interest rates. But Tesla, in particular, has struggled this year in part because of CEO Elon Musk’s attempt to leverage his huge stake in Tesla to buy Twitter. He even sold $8.5 billion worth of Tesla stock to raise cash to use for the purchase, which helped put downward pressure on Tesla’s stock price.
Other Big Tech companies have also recently announced stock splits to help bolster their affordability and appeal to everyday investors. from Amazon (AMZN) The 20-to-1 stock split went into effect on Monday. Alphabet, which has Google (GOOGL), also approved a 20-to-1 split that will take effect in July. Online retailer Shopify (STORE) has a 10-for-1 stock split scheduled for later in June, while meme stock darling GameStop has also offered to split its shares.
Tesla’s move may also aim to include it in the famous Dow Jones Industrial Average, which tends to include cheaper stocks. Apple (AAPL)for example, announced a 7-for-1 stock split in 2014 and was included in the Dow Jones in 2015.

The split does not guarantee it will be included in the Dow Jones, but the index may want the world’s most valuable automaker and a pioneer in electric vehicles.

Tesla shares rose 1% in extended trading.

Tesla also announced that Larry Ellison, president of Oracle (ORCL) had decided to leave the board of directors. Ellison has served on Tesla’s board of directors since December 2018.
Large company stock splits have become very popular in recent years. But one company with an alarming stock price has never split up and said it never will: Berkshire Hathaway (BRKA).
At $439,780 per share, Berkshire shares are out of reach for most individual investors. This is why he offers his Class B shares (BRKB)which have parted ways in the past, for just under $292.

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