By Aakash B and Akanksha Rana
Shares in the electric carmaker rose more than 6% in early trading. The stock, which traded at around $1,467 before the bell on Wednesday, is among the highest priced on Wall Street.
The five-for-one split – Tesla’s first – comes at a time when analysts and investors have expressed concerns over the stock’s high valuation in the market despite cash burn concerns.
“The move makes sense for Tesla, as it will make its shares cheaper and more accessible to young first-time retail traders using platforms like Robinhood,” said Jesse Cohen, senior analyst at Investing.com.
“While stock splits are typically non-events for investors, the reaction seen in Tesla’s stock following the announcement underlines the surging demand from the Robinhood-retail traders to get in on fast-growing tech names.”
“We believe institutional investors have turned the corner in a positive direction as Musk & Co. have not just talked the talk but walked the walk on its Model 3 sales and profitability trajectory over the last year despite COVID,” Wedbush analyst Dan Ives said.
Twelve of 33 analysts covering the stock rated it at “sell” or lower, and just eight rated it at “buy” or higher. The median price target for the stock is $1,300, up from $615 in May.
(Reporting by Aakash Jagadeesh Babu and Akanksha Rana in Bengaluru, writing by Subrat Patnaik; Editing by Maju Samuel)