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Please be advised of the upcoming Tesla Inc (TSLA) stock split that is going to take place as per the following schedule:
Common shares will trade at the new split-adjusted price from 25 August 2022 onwards.
What is a stock split?
A stock split is a corporate action taken by companies that have seen their share price increase to levels that are either too high or are beyond the price levels of similar companies in their sector, to divide their existing shares into two or more shares. Read more about stock split here.
Why do stocks split?
The primary motive is to make the shares more affordable to small investors even though the underlying value of the company has not changed. TSLA would like its stock to be more accessible to a broader base of investors.
What is the split ratio?
TSLA also announced it will split its stock in a 3 for 1 offering.
What will this split mean to investors?
Each share of Tesla Inc stock that an investor owns before Ex-Date (25 August 2022) will be eligible for stock split. Investors will receive two additional shares and the stock price will be divided by 3.
Here is an example:
|Pre-Split||Post-Split||As of 25 August 2022|
|Shares held||100 shares||300 shares||Shares are multiplied by 3|
|Share Price||$900 per share||$300 per share||Share price is divided by 3|
|Value||$90,000||$90,000||Total value remains equal|
If an investor owns 100 shares and the market price is $900, $930 as take profit. After 3 for 1 stock split, the investor will own 100*3= 300 shares and the estimated post-split price would be $900/3 = $300, and the take profit price will adjust to $930/3=$310.
All pending orders: Buy Limit, Sell Limit, Buy Stop, Sell Stop, Buy Stop Limit, Sell Stop Limit, will be deleted.
Does the 3-for-1 stock split mean the value of my Tesla Inc shares will increase two times?
Unfortunately, not. As stated in the above example, the increase in the number of stocks means every share is now worth less than its previous value, precisely, it’ll be 1/3th the previous value.
How do stock splits affect short sellers?
Stock splits do not affect short sellers in a material way. There are some changes that occur as a result of a split that affects the short position, but they don’t affect the value of the short position(s).
If you have any questions about any of these changes, please contact our Client Service team or your Account Manager.
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