You can forget about Tesla stock price being over $1,000 — at least for a while.
On Tuesday, the company announced its first ever stock split. The split will be performed in a five-for-one fashion, meaning one stock will be split into five.
In a stock split, there are no material changes to the company's overall market cap. In practice, those who own Tesla stock on Aug. 21 will receive four additional Tesla shares per share after trading closes on Aug. 28, 2020. Then, the price of the stock will be adjusted to 20 percent of the original price.
Stock splits are typically done when the price of a stock gets so high that it intimidates small shareholders. Right now, Tesla shares are valued at $1,374 a piece, which may sound like a lot for someone wanting to own at least one Tesla share. Divide that by five, and you get a far more manageable $274.80 price (so you'll be paying a fifth of the price but it'll be worth just 20 percent of a current Tesla share).
SEE ALSO: Lucid's driver assistance system will watch you more than Tesla's AutopilotTesla says it has decided on the split to "make stock ownership more accessible to employees and investors."
Ideally, this should put some buying pressure on Tesla stock as smaller investors flock to buy, but, as always, nothing is guaranteed.
Tesla's move follows Apple's recent four-to-one stock split announcement, the fifth split in the company's history.
