Tesla has announced a stock split for 31 August. Shareholders will receive four additional share certificates as dividends for each share. With this, Tesla wants to solve the problem that the own share has become too expensive. The first reaction of the stock exchange: the shares became even more expensive.
+ + Kindly see our update below + +
Goodwill does not change as a result of the stock split but since the goodwill is spread over significantly more shares, each share only has a smaller share in the company. This automatically means that the share is also worth less.
With the stock split, Tesla primarily wants to lower the entry hurdle into a possible investment, which most likely affects small investors. Large investors, who handle higher amounts anyway, will hardly be affected by the stock split. This should enable more employees and investors to become shareholders, as Tesla explains. The procedure is to become effective on 31 August.
Specifically, all shareholders registered by 21 August are to receive a dividend of four additional ordinary shares for each share held after the close of trading on 28 August. Tesla has announced that the adjusted shares will then be traded starting the following Monday 31 August.
The initial reaction of the stock exchange: The price of the share continued to rise, in post-trading by around seven per cent to briefly reach $1,472. The prospects that buying interest could increase apparently gave some investors hope for a good deal.
For Tesla, this is the first stock split since its IPO in 2010, and compared to the issue price of 17 dollars, the value has increased by a factor of 86. Based on the current price, the value of a share after the split would be around 290 dollars.
Update 1 September 2020: As Tesla has now announced, the company intends to raise up to five billion dollars by selling additional shares. This would enable the electric car manufacturer to use the soaring price of its shares to raise fresh capital.
At the same time, it must be noted that this is not a classic capital increase in which the new shares are issued in one go. As part of a so-called equity distribution agreement with various banks, shares can be issued for up to five billion US dollars (4.2 billion euros), according to documents submitted to the US stock exchange supervisory authority SEC on Tuesday. The shares will then be placed in several small tranches. Tesla did not announce when and with what volume shares will be sold in each case.
Even after the stock split on 31 August, Tesla shares have continued to increase in value. Since the announcement of the split, the shares have increased in value by a further 70 per cent. Currently, the shares are quoted at around 500 dollars. A year ago – taking the stock split into account – they were still available for around 40 dollars.
– ADVERTISEMENT –