1-for-5 plan, this will not affect the basic fundamentals of stocks, but investors should prepare for potential volatility afterward.
After the trading session on August 28, Tesla shareholders will receive an additional four shares for each share they hold. Starting from August 31, Tesla's stock will begin trading on a split-adjusted basis.
After the split, the number of Tesla's shares will increase fivefold, and the price per share will decrease by 80%. Tesla's total market cap and investors' portfolios will remain unchanged.
In the past, stock splits have been a bullish signal for some aggressive traders because it represents confidence in the stock's prospects. Moreover, lower stock prices mean more retail investors can afford to buy the stock.
However, investors can now hold stocks in the form of ETFs, and many brokers also offer fractional share trading.
Although the stock split does not affect the fundamentals, Tesla's stock may experience larger...