The slower rise might be a small disappointment to investors.
Tesla shares are up about 8% since the company declared a 3-for-1 stock split on Aug. 5. The
is up about 4% over the same span.
Seven trading days beyond the first Tesla stock split, back in August 2020, shares were up an incredible 46%. Tesla stock rose about 81% from the declaration to the split becoming effective.
The S&P 500 was roughly flat over the span Tesla stock gained that 81%.
This time, Tesla shares have a long way to go if that performance is to repeat. There are about nine trading sessions left before the split is effective.
Tesla stock was down 1.2%, at $916.58, in recent trading. The S&P was down 0.3%. The Dow Jones Industrial Average was up 0.3%.
Expecting a repeat of 2020 is probably too much. What’s more, the split was just declared following the company’s annual meeting of shareholders. But management has been talking about this 3-for-1 split since March.
Investors, and traders, like making a quick buck trading a stock into an event. But employees, if they are paying attention, shouldn’t be too upset with the slower rise. That’s because they can buy stock at a better price.
Tesla has an employee stock purchase plan, or ESPP, that lets workers purchase stock with up to 15% of their total compensation at 85% of the prevailing stock price, subject to limitations.
Tesla didn’t respond to a request for comment about the limitations or how many employees avail themselves of the opportunity.
Tesla will also match retirement contributions at, essentially, a 50% rate up to $3,000. So if an employee contributes $6,000 to their 401(k) plan, they get a bonus $3,000. That program started in 2022.
Why investors buy stocks that are splitting is a fair question. The value of total stock held doesn’t change, just the number and price of shares. But investors, and traders, believe stock splits are a signal from management that good times lie ahead. Companies don’t split a stock expecting it to fall. And a lower share price can make shares more attractive to retail buyers.
Write to Al Root at firstname.lastname@example.org