Tesla announces a Five for One Stock split

Tesla (Nasdaq: TSLA) announced a planned 5-for-1 stock split after the market closed on Tuesday, a move that could make the stock more attractive to price-sensitive investors. Tesla's stock made an incredible run on 2020 in 2020 and is up 229% to date. The stock closed Tuesday at $ 1,374.39 each, well above its 52-week low of $ 211. Although stock investing 101 teaches you to ignore stock price and rely on valuation metrics instead, some investors anchor themselves in stock prices and tend to shy away from high numbers. A stock split reduces the price of a stock without changing the value of the investment. In the case of Tesla, the company intends to offer holders four additional shares for every share they own beginning August 21. At Tuesday's closing price, each of those five shares (four additional + the originally held share) would be worth about $ 274.88 for a total price equal to the current share price. While the split shouldn't change the value of an investment in Tesla, the lower price could attract new investors to the stock. Tesla's shares traded 7% after the close of business, adding more than $ 15 billion to the company's market cap, although nothing changed in the automaker's fundamentals. For comparison: the market capitalization of the auto company Fiat Chrysler Automobiles (NYSE: FCAU) is currently 23 billion dollars.