in its quarterly earnings report released on February 1st alphabet Google's parent company announced a stock split of 20 for1 since going public in 2004 this is only the Stock's second split if alphabet issued 19 additional shares for every share held the stock price would drop from $2,700 to less than $150 at today's closing price the news on February 2 caused a rise in share price of almost 8% % to just under $3,000 stocks of Apple and Tesla which split four and five times respectively on the same day in August 2020 pale in comparison to the 20 for one split Nvidia another widely held tech company will split four for one in July of 2021 is a stock split for Tesla imminent stay tuned for additional information in the case of alphabet a stock split would cut the price of a share to 12th of its original price making it more affordable for individual investors since the start of the co9 epidemic Wall Street has experienced a massive influx of retail Traders since March 2020 low interest rates and growing demand for tech stocks like alphabet Apple Tesla Nvidia have driven up their prices alphabet stock has seen a price increase of more than 100% alphabet's massive stock split ratio is unusual but not unprecedented in 1957 Getty oil company's Equity split 20 to1 in 2018 the newly merged Bank split 20 for one and in June of 2021 the adtech company trade desk divided 10 for one The Eccentric founder and CEO of Tesla Alon musk made the remark last summer that the stock was too expensive at roughly $1,300 saying that more people should be able to acquire the darling shares after that shares were split five ways 15 months later Tesla stock is nearing a comparable level following a remarkable increase this year stoking suspicion that musk May announce another share division to appeal to individual investors a rumor that was sparked earlier this month by short seller Gordon Johnson on August 11 2020 Tesla announced that it would be splitting its shares of equity 5 for one Twitter user Sawyer Meritt reported that the price of a Tesla was 1,000 $373 after the split prices jumped back over $1,000 to $1,024 it's likely that Tesla's leadership will start thinking about a possible second separation if musk follows through on his plan to sell 10% of his shares which would make him the world's richest person for tax purposes then we should see a correction in the market cap as we approach the same $1,300 level as predicted by Neil mcneel McNeil whose 30 stock posts split index has returned 12.5% annually since 1996 thinks Tesla is overvalued despite having woken up the world to the possibilities of electric cars however M Neil notes that Tesla is absent due to the fact that the company's current valuation makes it worth more than all other automakers put together almost 400 when compared to Rivals its price to earnings ratio is 50 times higher to reach that kind of worth the company would need to be operational and profitable for at least 20 to 30 years McNeil cautions investors to think carefully about these factors before buying Tesla's shares out of irrational enthusiasm to keep its current $1.2 trillion valuation Tesla needs to sell 31 million cars by 2031 new construct CEO David trainer said last week adding to the Tesla bear party eight times less than its present price price Tesla is only worth $150 trainer said his goal was diametrically opposed to jeffy's new $3,000 estimate however Exile Capital CEO and ETF investor David bars disagrees he argues that experts are making an error by comparing upstarts like Tesla to established players like Ford and GM using outdated measures Tesla's intangibles such as its brand patents and Goodwill are enormous if you use a different valuation process and don't consider them into any of the price estimates according to bars Tesla is really just a front for a technology corporation and the data it collects from its vehicles in order to power its autonomous driving software has enormous potential worth applications for this data in the future may include Al software services and many others it appears that the market is misjudging Tesla since musk wants Tesla to be an investment opportunity for everyone he will likely welcome the prospect of a stock split however increasing the number of shares outstanding might also increase executive salary investors May regard the shares as more attractive after the split because of the lower price this is only a theory not a fact Johnson of GLG Capital meanwhile argues that the idea of purchasing shares at a discount is used to attract investors given the positive impact the 2017 split had on Tesla's stock price a repeat is likely and since the split last year that's all Tesla seems to care about while Tesla stock dropped this winter it has now recovered to rise by about 7% for the year pick a percentage yes now I see it Gary black seeking to explain Johnson's comments on Twitter cited a 20 to1 divide as the explanation for Johnson's $67 price goal for Tesla according to Ed Moya an analyst at one Honda Tesla's prospects have improved since the company announced sales agreements with auto rental companies Herz and Uber he admits that he was mistaken when he said that he would never be able to save $11,000 the success of Tesla has skyrocketed they've handled the chip scarcity better than their competitors because of their agility and resourcefulness even though the value is absurd the stocks recent performance suggests that investors should buy Moya predicts that if Tesla performs a new split the stock price might rise to $2,000 investors will welcome a split and the stock price will rise because of their devoted fan base investors should exercise caution and keep their eyes peeled in light of all the split rumors since the new stock price is lower Market volatility may increase after a stock split because of the low entry price there will be a flood of new investors the new stock price may be affected by a wide range of circumstances including cluding the reactions of investors and Market speculation when a stock gets split it is usually a novice investor who thinks it is a good thing unseason Traders frequently mistake correlation for causation book values and dividends rise with the company's performance hence a stock split is assumed to be inevitable an unskilled investor may eventually confuse the two terms if exposed to them frequently enough however there are always outliers and Burkshire haway burkham Shar price of several $1,000 per share proves this point the price of Tesla stock dropped by $70 for the ordinary person and new investors after musk tweeted in May 2020 that he thought the stock was priced too high musk is mysterious shareholders and potential investors alike are swayed by musk's Charming approach to nearly every aspect of the company if the stock is expected to split investors will likely follow musk's lead and and purchase shares it's unclear how much higher Tesla slow will go after the upcoming split for the same returns as before the price would need to rise by about 30% from where it is now if Tesla's stock ever splits again it may be a fantastic buy some industry Watchers believe that Tesla will maintain its dominant market share despite the emergence of new EV competitors because of its early entry into the market however in the next years the EV Power warhouse will face competition not only from existing competitors but also from new entrance imagine if conventional automakers also made electric cars what would it look like without a split Tesla stock is certain to continue increasing in value by the thousands if not the tens of thousands over the next decade or two making it unaffordable for the average worker to invest in the company if the business does well then that's a bad thing to prevent this from happening Tesla will need to divide the stock having additional shares in circulation is another perk of a stock split this expands the pool of available shares which can then be allocated to more workers or investors it will be fascinating to observe if Tesla continues to split its stock five for one or if it switches to a different split ratio Tesla's overconfidence in the value of its stock could be signaled by a 20 to1 split a low split could reflect insecurity I believe Tesla will maintain a 5:1 split which conveys optimism about the company's future please leave a comment with your thoughts on the Tesla stock split
