Download This PaperThe Tesla Stock Split Experiment
13 Pages Posted: 27 Aug 2020 Last revised: 8 Sep 2020
Date Written: August 17, 2020
Abstract
On August 11, 2020 at 16:59 EDT, Tesla announced a 5-for-1 stock split. The trading in the after-market and during the subsequent two days amounts to a unique financial economic experiment. Although stock splits have no fundamental impact on value, Tesla’s stock price rose 17.94% in the two days following the split – adding almost $50 billion in market value. This paper examines that price increase in detail and concludes there is no rational explanation for the size of the run-up following Tesla’s stock split announcement.
Keywords: Tesla, Valuation, Stock Split
JEL Classification: G00, G10, G12
Suggested Citation: Suggested Citation
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