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Today after the close of regular trading Tesla, a well-known American electric vehicle company, announced that it intends to split its shares 5 for 1. The split announcement comes after a sharp rally in the value of Tesla equity in recent quarters.
The company's shares quickly rallied on the news, picking up 8% in after-hours trading.
Tesla, ever a controversial company, traded for as little as $211 in the last year. After today's news the company is now worth $1,485 per share. Worth comfortably more than $250 billion, Tesla is amongst the world's most valuable companies, let alone among the most valuable automakers.
Using our arithmetic, Tesla shares would be worth around $297 after the split.
The stock split comes two years after take CEO Elon Musk infamously tweeted that he was considering taking Tesla private and had “funding secured." Tesla then published an email Musk had sent to employees that described his rationale, only to backtrack a few weeks later and announce the company would remain public.
That tweet got the attention of the U.S. Securities and Exchange Commission, which later accused Musk of securities fraud. The parties reached a settlement without admitting wrongdoing.
Under the settlement, Tesla agreed to add two independent directors and Musk would step down as chairman for three years.
Since then Tesla shares have experiences volatile swings before going on a run that started this spring. The stock has been on a tear even as other automakers like Ford and GM have send their shares languish. This share-split is perhaps the logical conclusion of its rapid appreciation.