Tesla’s Stock Split Pushes Share Price Up 13%

2020 has been a good year for Elon Musk.

Despite COVID-19 locking down economies around the world, Elon has gone from strength-to-strength. If a new child, a successful SpaceX launch and Tesla defying all of the short sellers wasn’t enough, overnight Elon became the third richest person in the world with a net worth of $111 billion (eclipsing Facebook’s Mark Zuckerberg by $800 million).

Monday was Tesla’s first trading day after its 5-for-1 stock split. For those unfamiliar with a stock split, Tesla closed on Friday at a share price above $2,200. The company then split every 1 share into 5 shares, and the share price opened Monday around $440 (So the 1 share worth $2,200, turned into 5x $440 shares – still worth $2,200 in total).

Every shareholder owns the same % of the company they owned before, they just own more shares. In this way, the split does not change the value of an investor’s total holdings of the company, just the number of shares making up their portfolio. 

Tesla’s first day of trading after its stock split saw it continue its incredible rise, up 13% to almost $500 per share. This takes the total share price return for the past year to over 1,000%. 

Overall the company’s market cap is now $464 billion, making it the 8th most valuable publicly traded company in America. (More valuable than Visa at $461 billion and less valuable than Berkshire Hathaway at $513 billion). 

There may be more good news on the way for Tesla shareholders. The company may be added to America’s benchmark S&P 500 index. If it is added, all ETFs and Index Funds that track the S&P 500 will buy shares of the company. The year of Elon continues. 

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