As an investor and stock analyst who‘s followed Tesla for over a decade, one of the most frequent questions I get is: "How many times has Tesla‘s stock split?"
It‘s understandable why there‘s so much intrigue. In my career, I‘ve rarely seen a company expand so rapidly while also seeing its stock price skyrocket beyond most people‘s reach.
Tesla‘s conducted two stock splits that have made shares more affordable. Below I‘ll explain exactly what that means, provide the key dates and figures around each split, and also share my thoughts on whether additional splits could occur.
In short:
- Tesla executed a 5-for-1 stock split on August 31, 2020
- This was followed by a 3-for-1 split on August 25, 2022
- The splits made the stock more accessible after huge price surges
- Further splits are unlikely in near-term given recent stock declines
Now let‘s get into the nitty gritty details, starting with what a stock split actually is!
What is a Stock Split?
Imagine you have a pizza that you cut into 8 slices that get divvied up between your friends. Then more friends show up, but you don‘t have more pizza. So you decide to cut each existing slice into smaller pieces so there‘s enough to go around.
That‘s essentially what a stock split does! The "pizza" is the company itself, represented by its total shares outstanding. When the stock price gets too expensive (or too large a slice), the company can affordably multiply the slices through a split.
Some key implications:
- Company is still worth same overall (whole pizza)
- Stock price reduces since more slices per pizza
- Investors end up with more shares (slices)
- Makes stock more accessible with lower nominal price
Now let‘s see how this played out with Tesla…
Tesla‘s 5-1 Stock Split (August 2020)
Leading up to 2020, Tesla‘s business and valuation expanded massively. However, shares outstanding stayed fixed, making the stock price rise higher and higher:
| Date | Share Price | Market Cap |
|---|---|---|
| IPO (June 29, 2010) | $17 | $1.7 billion |
| August 11, 2020 (pre-split) | $1,374 | $254 billion |
For context, that‘s a over 80x increase in market cap and over 80x stock price appreciation in 10 years! No wonder the pizza slices were getting more gigantic and costly.
- On August 11, 2020, Tesla announced a 5-for-1 stock split to make shares more accessible
- For every 1 share held, investors would get 4 additional shares
- Stock closed at $1,374.39 on August 11, then opened at $440.99 (adjusted) on August 31 after split
This expanded slices for both institutional and retail investors to buy at lower nominal costs again. Tesla framed it as a way to "reset" the price after huge run-up.
The split unlocked further demand and hype, powering Tesla over 70% higher by end of 2020 even amidst pandemic uncertainty.
Tesla‘s 3-1 Stock Split (August 2022)
Fast forward 2 years and Tesla is even bigger – eventually reaching a trillions dollar valuation! Share prices approached $1,000 again prior to the next split:
| Date | Share Price | Market Cap |
|---|---|---|
| August 5, 2022 (pre-split) | $931 | $1.04 trillion |
- With shares again getting costly, Tesla announced a 3-for-1 split on March 28, 2022
- Effective August 25, 2022, investors got 2 additional shares for each 1 owned
- Stock closed at $921 on August 24, then opened at $302 post-split
While lower than 2020, a 3x split still drops the cost to 1/3rd the price and brings far more investors into the mix. Tesla also timed this with high anticipation about upcoming S&P 500 inclusion.
Notably though, Musk did not highlight employees this time around when announcing rationale. Likely because their compensation is already heavily tied to stock awards.
Will Tesla Split Stock Again?
Don‘t expect another split just yet. Yes, Tesla eventually rebounds from trouble, but shares have fallen below $300 as of August 2023.
That‘s still rather lofty for most investors compared to Apple or other bluechips. However, Tesla also faces pressing macro uncertainty with high inflation, rising rates, and signs of recession.
In my view as a seasoned analyst, Tesla will focus more on financial execution over stock splits for the next 12-18 months minimum.
However, another rally back above the $400+ threshold could expedite a split yet again. With Tesla closing in on trailing deliveries and aggressive long-term plans, never fully count them out!
No matter what though, get ready for the rollercoaster ride to continue if you invest in Tesla!
Let me know in the comments if you have any other questions about Tesla‘s past stock splits or predictions for the future. I‘m always happy to discuss with fellow investing enthusiasts!
