In case you’ve heard about the Tesla (TSLA) 5 for 1 Stock split happening on the 31st of August, 2020, and you’re wondering how that impacts your TSLA shares, keep reading to understand all you need to know about it.
First, what exactly is a stock split?
A stock split is usually when a company adjusts its price per share by dividing or combining its existing shares. However, this does not affect the valuation of the company, it only affects the price of each share.
There are different types of splits, however, in this case, Tesla is doing something called a forward split. Now, a forward split increases the number of shares a company has, inadvertently decreasing the price per share.
Example, if you own 1 ABC share at $20 per share, and the company decides to do a 2 for 1 forward split, then you will own 2 shares at $10 each, still totally your initial $20 per share.
The essence of a forward split is to reduce prices of a company stock thereby making it more affordable for more people, while retaining the company’s valuation.
Currently own stock in Tesla? Here is what will happen:
The Tesla 5-for-1 (5:1) forward split implies that for every share you own, you would receive times 5 of its shares or better put, for every 1 share, you will get an additional 4 shares to supplement, making (1 x 5) 5 total shares. Essentially, the price per share will decrease, but the number of shares you have will increase. It also applies to fractional shares: if you have fractional shares of 0.2 of TSLA, which will now become (0.2 x 5) 1.0 TESLA
Below are the terms of the split:
If you have previously opened any pending orders to buy or sell TSLA, they would be automatically canceled, however, after the split has been done, all orders would be processed normally.
You would not be charged any taxes as taxes will also become 1/5th of what it was previously per share.
Please note the following:
- All splits will be processed prior to the Market Opening on Monday morning.
- All existing pending orders for TSLA will be immediately cancelled while the splits are processing.
- Customer Accounts will not reflect the splits at the same time; however, they will be updated very quickly once the processing is completed.
Still have questions: Contact Trove Support
