Tesla (NASDAQ:TSLA) has split its stock twice since going public in 2010, and both occurred in just the past four years.
The first one happened in 2020 when TSLA stock was trading at $2,250 a share and were split five-for-one to bring the price down to $450 a share. The second time was two years ago when the stock was at $900 and Tesla split three-for-one to bring the share price down to $300 each.
With TSLA stock trading under $289 a share, it’s not likely the electric vehicle maker will split its stock anytime soon, but I predict it will happen before 2028. Elon Musk’s close association with President Donald Trump is already paying dividends as Tesla shares popped 15% the day after the election and there is good reason to believe they will continue rising during his administration.
They might just rise enough again to justify a split before the next presidential election cycle ends.
24/7 Wall St. Insights:
- Tesla (TSLA) has split its stock twice in the last four years and the prospects for a third one in the next four years are high.
- Many of Donald Trump’s policy proposals would actually favor Tesla over its rivals, which could lead to greater market dominance and expanded profits. Rising earnings should lead to a higher stock price.
- If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.
Leveling the playing field
On the surface, Tesla looks like it might not fare well during Trump’s administration. The president has proposed eliminating the $7,500 tax credit on EVs as well as doing away with the loans the Biden administration has given out to encourage more EV manufacturing in the U.S. as well as making batteries for them in this country.
However, a number of Tesla models have already lost the tax credit, including the popular Model 3 and the Cybertruck, though Musk has said the latter may regain them before the end of the year.
But Musk himself has gone on record supporting doing away with the industry subsidies. He believes it will be better for Tesla if no one got any, no doubt because it would reduce the amount of competition his company faced.
As the largest EV maker in the U.S. (it recently lost the global title to China’s BYD (OTC:BYDDY)), Tesla is also the only one that is profitable.
Ford (NYSE:F) and General Motors (NYSE:GM) are both stepping on the brakes for EV production until they figure out a way to make their vehicles profitably. Demand for EVs has also fallen sharply.
Minimizing the impact of cheap Chinese imports
Moreover, Trump wants to impose tariffs on imports ranging from 10% to 20% with products coming in from China being socked with duties as high as 60%. That will make cheap EVs from China much more expensive such that manufacturers like BYD, Nio (NYSE:NIO), and Xpeng (NYSE:XPEV) would likely bypass the U.S. market altogether.
With little foreign competition and a reduced number of domestic rivals, Tesla would see its market dominance grow. Coupled with the tax reform Trump proposes that would lower the corporate rate to 15% for companies that build or make products in the U.S., Tesla’s profits could widen.
As earnings grow, so should Tesla’s stock price. And as the dominant EV maker in the U.S. it could see TSLA shares soar.
It’s not out of the realm of possibility Tesla will see its stock rise again over the next four years. To hit $900 per share again would equate to it tripling in value. I think that’s quite likely, particularly if the economy as a whole rebounds. It’s why I see a new stock split in Tesla’s future.
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