Tesla shares are about to get much cheaper with a three-for-one stock split

The stock will begin trading on an allocation-adjusted basis on August 25.

You’re here (TSLA) shareholders approved the split on Thursday at the company’s annual meeting of shareholders. After the split, a person who owned one share of the company will own three, and the price of each of those shares will be one-third of the price at that time. At Friday’s closing price of around $865, that would make a price per share after the split around $288.

Stock splits are usually done to increase a stock’s liquidity, which makes it easier for investors to buy and sell the stock. Essentially, the move will triple the number of Tesla shares on the market, but the company’s overall valuation — and the value of each investor’s stake — won’t change. Splits can also stimulate demand for a stock because they put the price within reach of small, individual investors.

Tesla has already made such a move, as recently as 2020.

While deep-pocketed institutional investors may not care as much 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.

When Tesla announced plans to conduct a stock split earlier this year, it said in a regulatory filing that it believed “the stock split would help reset the market price of our common stock so that our employees have more flexibility in managing their equity, all of which we believe can help maximize shareholder value.”


Cnn

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