The Tesla Stock Split Experiment

13 Pages Posted: 27 Aug 2020 Last revised: 8 Sep 2020

See all articles by Bradford Cornell

Bradford Cornell

Anderson Graduate School of Management, UCLA

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

Cornell, Bradford, The Tesla Stock Split Experiment (August 17, 2020). Available at SSRN: https://ssrn.com/abstract=3675896 or http://dx.doi.org/10.2139/ssrn.3675896

Bradford Cornell (Contact Author)

Anderson Graduate School of Management, UCLA ( email )

Pasadena, CA 91125
United States
626 833-9978 (Phone)

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