KEY POINTS

  • Tesla shares were valued at about $1,374 as of Tuesday’s close
  • Tesla has a market cap of more than $256 billion – making it fmore valuable than rival automakers Ford and Toyota Motor
  • Since March lows, Tesla shares have almost quadrupled in value

Tesla (TSLA) has announced a five-for-one stock split – a move that would make its lofty shares more affordable to retail investors.

Tesla stockholders of record as of Aug. 21 will receive four additional common shares for each share held. Trading on a split-adjusted basis will begin on Aug. 31.

The decision follows a recent move by Apple (AAPL) to make a four-for-one stock split.

Tesla shares were valued at about $1,374 as of Tuesday’s close. In pre-market trade on Wednesday morning, shares jumped another 6.5%.

The company now has a market cap of more than $256 billion – making it far more valuable than rival automakers Ford Motor Co. (F) – market cap $28.7 billion -- and Toyota Motor Corp. (TM) – market cap $188.3 billion.

Since March lows, Tesla shares have almost quadrupled in value, while speculation has arisen the company will soon join the S&P 500 Index after delivering four consecutive quarters of profits. Inclusion in that index will make it mandatory for numerous mutual funds and exchange-traded funds to buy its shares.

“At a time where the appetite for [Tesla] stock and overall [electric vehicle] story continues to gain momentum, I think [the stock split is] a smart move,” said Dan Ives, an analyst at Wedbush, according to Bloomberg.

The Wall Street Journal reported that some investors had been urging Tesla CEO Elon Musk to do a stock split, since shares were priced too high for average traders.

Credit Suisse analyst Dan Levy said the stock split will make Tesla shares more accessible to both retail investors and Tesla employees.

Reuters reported that stock splits have become rare in recent years – only three members of the S&P 500 have announced splits in 2020, versus an average of 10 annually over the past decade.