Tesla said it would offer a five-for-one stock split that would make its equity more accessible to investors as it prepares to enter the S&P 500 benchmark.
Tesla, which trades at around $1,500 per share is one of the most expensive stocks on Wall Street, will pay a four share dividend to each of its stockholders of record on August 21. The payment, which will come on August 28, will be reflected in Tesla's open market share price on August 31.
This stock split could be used to also entice the tens of thousands of customers of Robinhood to add shares at a cheaper price. The dilution, however, will have no effect on the value of Tesla's earnings compared to its day-to-day trading level.
Tesla, which is the world's most-valuable carmaker as of last month, holds that helm despite its modest--less than 1%--contribution to total global sales, will sell, at most, 500,00 cars this year. Ford, which has a market value that is ten times less, will likely shift 2.2 million vehicles and Toyota, with a market value of $205 billion, will sell 10.7 million.
Per Credit Suisse analysts, the S&P 500 inclusion could possibly trigger even more activity in Tesla stock, with 'significant' incremental buying of around 18 million shares--which is some 10% of its outstanding total--from passive investors and fund managers that track the benchmark index.
Tesla Daily's Rob Maurer joined TheStreet's Katherine Ross to discuss the stock split and what it means for its inclusion in the S&P.
You can follow Katherine Ross on Twitter at @byKatherineRoss.