A stock split is a very popular activity which is done by most of the company. In this act, the company divides its one share into 3, 4 or 5 stocks depending on the need and the marketing strategies of the company. Though this is done to give benefits to all, many a time investor and the existing shareholders just don’t take it positively and create a lot of buzzes about it on the market and their mind regarding this. In this way, they not just miss the opportunity but many a time they also make the chances to lose instead of benefits. If everything would be clear about it, no loss will be there for anyone.
Recently Tesla stock was also split into five stocks. On the day 21st of August Tesla announced that the company would count and record the stocks available with everyone. This time may take some number of days between the 21st of August to the 28th of August. They also said that after counting it all, the single stock of the company would be divided into 4 stocks. People were very confused about it. They were not understanding what will happen when they will purchase some shares of the company between the date 21st August and 28th of August.
With the help of this split, there would be no loss to any on. Companies do the splitting mostly when they find that the cost of their share is a bit more and investors are not able to purchase the stocks even when they want to invest in the company. With the help of the Tesla stock split, the company attracted new investors to invest in this company.
Along with the company, the existing investors would also be benefited from this split. With the split, the number of shares of the investors will increase five-time. So suppose in the beginning they had only 120 shares of the company. After splitting the stocks, 120 shares of the company would be converted into 600 shares. In this way, a company can also easily find the buyers to purchase the stocks.
Now you must be thinking about what benefits the future investors would get with this split. As we already told above that with this split, the company would attract new investors. It means new investors would be able to purchase one share of the company at a lower price. This is so as along with the number of shares, the price of a single share will decrease. Therefore now customers can buy the shares of the Tesla stocks at the lower cost. You can check more tesla stock news before investing in the stock of Tesla.
Disclaimer: The analysis information is for reference only and does not constitute an investment recommendation