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Stock-Split Watch: Is Tesla Next?

After the split, the company’s fair value estimate will be adjusted to about $255 per share to account for the increase in the company’s outstanding share count, according to Goldstein. He’s researched, written about and practiced investing for nearly two decades. As a writer, Michael has covered everything from stocks to cryptocurrency and ETFs for many of the world’s major financial publications, including Kiplinger, U.S. News and World Report, python exponential The Motley Fool and more. Michael holds a master’s degree in philosophy from The New School for Social Research and an additional master’s degree in Asian classics from St. John’s College. TSLA stock has been on an upswing since last month, posting its biggest gains since October 2021, and the announcement of the stock split does not take effect immediately. The Texas-headquartered company hasn’t specified the actual date of the stock split.

Tesla’s 2021 impact report shows most of the company’s materials come from Argentina, China, and the Democratic Republic of Congo. Stock splits are connected to human psychology since 100 shares of $10 are more appealing than 10 shares of $100. This means that Tesla gives four more shares for every share owned now. While the EV market is growing at a rapid clip and creating high-margin business opportunities, it’s worth noting that the automotive industry has historically been very competitive and relatively low margin. Though Google Cloud is currently a money-losing operating segment for Alphabet, cloud service margins are usually considerably higher than advertising margins. By mid-decade, Google Cloud should be playing a key role in lifting Alphabet’s operating cash flow.

But these worries overlook the fact that economic contractions and/or recessions don’t last very long. Alphabet’s ad-focused model thrives because of its competitive advantages and the fact that the U.S. and global economy spend a disproportionate amount of time expanding. All this being said, here are three recent stock-split stocks that I believe are far better buys than Tesla right now. Wall Street and the investing community have been dealt a difficult hand in 2022.

Investors who previously couldn’t afford a share might now be tempted. But a split does not change the current value of the company in any way. Tesla announced in a press release on August 5th that the split will go into effect later in the month.

  1. Musk hasn’t made any recent public statements about the possibility of a new stock split.
  2. Over the past month, Tesla stock has surged, rising more than 6% as of early trading on Tuesday.
  3. But a stock split doesn’t necessarily mean that anybody’s getting anything of additional value with their money.

It will show the new price and number of shares, but the overall value will not change. This is a company focused on ramping up production at its Austin, Texas and Berlin-Brandenburg gigafactories, which were brought online earlier this year, as well as bringing new innovations to reality. Elon Musk’s forecast calls for the Cybertruck and Semi to enter production in 2023, and for the robotic humanoid Tesla Bot to make its debut sooner than later.

Tesla split its stock. Here’s what that means

On the other hand, investors with little appetite for risk or volatility can safely steer clear of the stock, and it certainly wouldn’t be advisable to buy shares simply because of the upcoming split. EVs are an exciting, fast-growing market, but there could be some twists and turns ahead that prompt the market to reassess Tesla’s highly growth-dependent valuation. A regulatory filing made by Tesla (TSLA 0.84%) at the end of March revealed that the electric vehicle (EV) leader plans to carry out another stock split.

In DexCom’s case, the company is trading at north of 100 times Wall Street’s forecast earnings in 2022. Effectively, this would reduce the company’s share price to a third of its current value while increasing the company’s outstanding share count by a factor of three. At the August 4 shareholder meeting, Tesla’s shareholders voted to approve the company’s proposed split. Keep in mind that it can sometimes take stock quote providers and online brokerages a few hours to a full day to recognize that a stock split has taken place. In theory, a lower share price can make a stock more affordable for a larger pool of investors, potentially resulting in increased demand for the company’s shares. This heightened demand can lead to a rise in the company’s market capitalization.

Further, an estimated 96 million people have prediabetes, which can lead to diabetes if left untreated. This means almost half the adult population in this country is a potential future client, based on these figures. So why should DexCom receive a pass for its premium valuation and not Tesla? An argument can easily be made that FAANG stock Alphabet (GOOGL 0.76%) (GOOG 0.64%) is the top stock-split stock to buy at the moment. Alphabet is the parent company of internet search engine Google, streaming platform YouTube, and autonomous car company Waymo, among other subsidiaries.

Behind the scenes of a stock split

Excessive stock splitting has been seen at market tops in the past, especially when tech stocks topped in 2000. QCOM stock skyrocketed more than 840% after the announcement of that first stock split in 1999. Shares surged from an April 1999 price of 21 to hit an all-time high of 200 on the first trading day of 2000.

Stock split history for Tesla (TSLA)

One of the most important things to recognize about forward and reverse stock splits is that they have no effect on the operating performance of a publicly traded company. Adjusting the share price and outstanding share count amounts to window dressing. Stock splits don’t impact a company’s market value, but evidence suggests that by making shares more affordable to retail investors, the move does often provide a short-term boost to share price. What ultimately matters is whether investors believe Tesla will continue to grow and create value for its shareholders over time. Its next-generation platform aside, there’s certainly no shortage of growth opportunities in electric vehicles, energy storage, and artificial intelligence (AI).

Even with Tesla being somewhat diversified, this is a lofty multiple for a company that predominantly makes a commoditized product. Out of the more than 200 stock splits announced and enacted through the first eight months of the year, arguably none has been more anticipated than that of electric vehicle (EV) manufacturer Tesla (TSLA 0.84%). The world’s most valuable automaker announced its intent to conduct a split in June, and with shareholder approval, it moved forward with a 3-for-1 stock split on Aug. 25, 2022. Investors should focus more on the company’s recent fourth-quarter earnings report, which gave shareholders a glimpse into the short- and medium-term future. Management stated that vehicle deliveries will likely decline in 2024 because Tesla is focusing resources on readying a next-generation vehicle design that it believes could spark its next major growth phase. First, it makes it easier for individual investors to accumulate shares.

Prior to a drop over the past week, the stock had risen more than 13% since a month ago. Investors who held Tesla stock on Aug. 17 will be eligible to receive the additional shares. They just revealed what they believe are the ten best stocks for investors to buy right now… And Tesla made the list — but there are 9 other stocks you may be overlooking.

This includes one of the largest and most-popular stocks on the entire planet, electric-vehicle (EV) manufacturer Tesla (TSLA 0.84%). With Tesla’s stock split rapidly approaching, here are five things investors should know. It’s worth noting that Tesla’s retail investor following is quite vocal on social media message boards, and the company’s CEO, Elon Musk, knows it.

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