If there was any question Tesla (Nasdaq: TSLA | TSLA Price Prediction) was back in the good graces of Wall Street, those were erased after today’s 12% gain in the stock price. Tesla shares reclaimed some of the ground lost this year amid a challenging EV landscape, placing the $200 level within striking distance once again. While the stock remains a far cry from its 52-week high of $300, Tesla has momentum on its side now.
By the size of the rally in TSLA shares, you’d never know that the EV maker just missed earnings estimates. With Tesla stock bulls circling, the next logical move for the company could be to drum up even more excitement and usher in the next wave of investors. One way they have proven to do this in the past is with a Tesla stock split.
Tesla Hype
One criterion for a stock split is positive sentiment, which after its latest earnings report Tesla has rediscovered. Tesla chief Elon Musk is a master at telling investors what they want to hear, like the accelerated launch of the company’s more affordable models as the fiercely competitive EV pricing wars intensify. Instead of waiting until H2 2025, Musk is stepping up the timeline to early next year to introduce vehicles with a price tag in the ballpark of $25,000.
Robotaxis were another highlight, including Tesla’s “purpose-built robotaxi product” that according to the company’s investment deck will follow a “revolutionary unboxed manufacturing strategy,” placing all other autonomous driving makers on notice.
Indeed, there’s a great deal of hype surrounding Tesla’s stock fueled largely for Musk’s ability to play into investors’ hands on innovations like the robotaxi.
Is a Tesla Stock Split in the Cards?
In Tesla’s 14-year history as a publicly traded company, it’s only split its shares twice: once in 2020 and again in 2022. If Tesla is working on a two-year schedule, with past splits both occurring in the month of August, there’s reason to suspect another TSLA stock split could be around the corner.
Before the first split, at 5:1, TSLA shares were trading in the stratosphere at over $2,200 per share. After the split, they hovered at a more affordable $442 per share. The second time around the stock was nearing $900 per share pre-split. The 3:1 stock split in Tesla stock brough shares closer to the $300 level, which created less sticker shock among mainstream investors.
In both instances, the splits made the stock appear more affordable to the naked eye. In reality, a stock split does nothing to change the market cap nor the value of the company. If Tesla’s market cap is $516 billion before the split, it will still be there once the split is complete. But it does bolster liquidity and can sway investors’ perception of value.
Additionally, a lower stock price could strengthen Tesla’s chances of joining fellow tech company Apple (Nasdaq: AAPL) as a member of the prestigious Dow Jones Industrial Average. Achieving Dow status could help Musk to mend fences with regulators with whom he’s sparred over the years. The Dow, whose members reflect America’s most “blue chip” companies, is a stock price-weighted index and is designed to reflect the market’s average stock price. Tesla might want to keep the price affordable to appear more appealing to the indices committee.
If Tesla’s going to split its stock in 2024, now would be the perfect time to do so. Wall Street clearly wants to see Tesla stock win. If you aren’t convinced, just watch how they punished Meta (Nasdaq: META) for surpassing earnings estimates and rewarded Tesla just for being Tesla.
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