Tesla ($TSLA) Stock-Split News Analysis:
As many of you know, $TSLA — Tesla Inc. has recently announced that they want to undergo another stock split. In order to understand more about how this split can affect TSLA, we can look at TSLA’s last stock split, and some other recent stock splits in the tech industry.
Firstly, it would make the most sense to look at Tesla’s most recent stock split to determine the potential effects of a future stock split that has been heavily rumored. Tesla announced their split on August 11th, which took place on August 28th. Between the open on August 12th and the open on August 28th, TSLA shares rose by over 52%. During this time the market went up by a little over 4% (the news that broke today sent TSLA up over 8%).
Last time Tesla announced their split, it was during their Q2 2020 financial report. So, if these rumors' are true, we can expect TSLA to break the news in their Q1 2022 report, which is set to take place April 25th 2022 (after market close). If you are looking to trade TSLA based off of this news that day (April 25th) is massively important.
Other Tech Stock Splits:
Apple’s most recent split took place on August 28th, 2020, which they announced on July 30th. Between the opening of the market on July 31 stand the first trading day after the split August 29th 2020, Apple rose by over 34%. During this time the market (S&P 500 was up a little over 7%)
Nvidia announced their most recent stock split on May 21st, and underwent their split on July 20th. Between the opening of the market on May 22nd, and the opening of the market on split day (July 20), Nvidia’s stock price increased by over 25%. During this time the market went up by a little over 8%.
Google recently announced a 20:1 stock split on February 4th 2022. Between the announcement of this split, and it’s current price (months before the split is set to take place), GOOG stock is down by 7.24%. This is the only stock on this list that has experienced negative returns after announcing their split, however, there is still time for them to change this.
Conclusion:
Over the past couple of years, there have only been 4 major US tech companies to undergo a stock split, all with varying degrees of split, from 4:1 all the way to a 20:1 split (later this year). More often than not, these splits have caused the underlying stock to increase between the announcement in the split date, however, Google is currently an exception to this (perhaps due to their 5 month + wait time). If we look at the performance of the above stocks after their split, we can see that the shorter the timeframe between the announcement and the split, the higher the return was. This is good to keep in mind as Tesla’s last split was 16 days after the announcement (applying that logic to our Q1 2022 earnings estimated split announcement date (April 25 2022), we can predict TSLA’s split to take place on May 11 2022)
All 3 of these stock splits experienced massive growth between their announcement and their actual stock split. The returns on these splits have ranged from 25–52%. (With GOOG being an outlier; down 7%). Applying this logic to TSLA stock, we can estimate that their price (from the previous stock close (March 25)) will range between $1,262 — $1,535.
Personally, I see this testing the ATH of $1,243.50, and either breaking up closer to $1,500, or bouncing off the high and staying between $1,100–1,200.
Originally published at https://utradea.com.
