Some Tesla stockholders must have gotten a shock this morning when they looked at the depot or the stock exchange. Tesla shares show a loss of around 66% from the previous day. But there is an all-clear: This has to do with the stock split that Tesla announced at the last annual meeting. This morning, every shareholder of the company will receive two new shares in their depot for each Tesla share they own. The split at a ratio of 3:1 lowers the share price from around EUR 900 to around EUR 300 per share. Because many financial databases can't keep up that quickly, it looks like there's a loss of around 66 percent (a third). Of course, that's not true and investors can just wait and see if the price is likely to adjust later in the day.
But why did Tesla carry out the stock split? Some buyers were deterred by the relatively high share price of around 900 euros. If a stock split comes into effect, the stock becomes visually cheaper and thus more lucrative for many. The stock market value remains the same. Although the price per share is falling, there are more shares. Accordingly, it remains at plus, minus zero. In the background, however, it could have the advantage for Tesla that more investors are now buying shares.
Tesla already carried out a stock split at the end of August 2020. At that time, the shares were divided at a ratio of 5:1. The day after the split, Tesla shares rose by around 12.5 percent.
