Elon Musk’s Tesla is set to make its shares more affordable for supporters after announcing a five-way stock split, the first in its history, on the back of a record year of growth for the electric car maker.
The company said on Tuesday that the share split would be made as a dividend distribution that would give four additional shares of “common stock” to shareholders listed as of August 21st. The share split will take effect from August 28.
Stock splits are mostly created by companies as a means to encourage smaller, retail investors to trade in their shares. Tesla’s stated goal is to “make shareholder accessible” to employees and investors. The company’s shares grew 6pc to $ 1,459 (£ 1,117) in extended trading after the news of the split came.
This is because Tesla has seen a more than 200pc increase in its share price since the start of the year, taking it to a record high of almost $ 1,500.
The rally has pushed its market capitalization past $ 250 billion, while Musk, its chief executive, is among the top five richest people in the world with a net worth of about $ 70 billion.
The rapid rise in Tesla’s share is fueled by a growing belief that the company has fixed its past production problems. It is also seen as moving to expand the appeal of its cars beyond the luxury niche with a series of new models.
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