Why Tesla shares rose today ahead of the stock split

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Shares of Tesla (NASDAQ: TSLA) jumped Wednesday on the final day of trading before the company’s latest stock split takes effect. The stock rose as much as 2.5% today, and still traded up 0.22% as of market close.

Investors might be looking back on the stock’s returns since its last stock split in August 2020. Since that 5-for-1 split, Tesla shares have returned more than 80%, compared to under 20% for the S&P 500 index.

So what

Although there is no fundamental change in a business or its valuation from stock splits, investors usually view them as a positive sign from the company. Tesla’s upcoming split is no exception, with the resulting lower price per share potentially attracting new retail investors. Although shares are down about 15% year to date, those investors still see plenty to like in the company’s future.

Now what

Tesla and its investors expect to see the company increase vehicle production at an annual rate of about 50% for the next several years. Its two new factories in Austin, Texas, and near Berlin will help that in the near term. CEO Elon Musk said earlier this month at the company’s annual shareholder meeting that he believes a total of 10 to 12 plants will eventually help it produce 20 million EVs annually.

The recently passed Inflation Reduction Act should also help by giving consumers tax credits to purchase EVs, with some limitations. While not all of Tesla vehicles will qualify, any new incentives will be an additional tailwind for the company.

Investors might be focused on the upcoming stock split today, but the business itself still looks to have a long runway for growth. You just need to realize that with the stock up more than 2,000% in the last three years, some of that growth is already built into the share price.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Tesla shares rose today ahead of the stock split appeared first on The Motley Fool Australia.

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More reading

• Tesla stock is rising ahead of its stock split
• 3 things you should know about the Tesla stock split
• Why Tesla shares are falling ahead of its stock split
• Why Tesla stock dropped Monday
• Why Tesla stock was up again today

Howard Smith has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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