Shares of electric vehicle maker Tesla rallied in after-hours trading on Wednesday as the company’s 3:1 stock split went into effect, the second such move in around two years, as the world’s most valuable automaker looks to make its stock more affordable.
Tesla’s stock began trading on a split-adjusted basis after the market close on Wednesday, with each investor gaining roughly two additional shares under the latest stock split, which was approved by shareholders earlier this month.
Tesla first announced the proposed 3:1 stock split in June as a way to make the nearly $900 stock more affordable; based on today’s closing price the new share price would be just under $300 per share.
Though the stock is down roughly 25% this year amid the wider market selloff, billionaire Elon Musk’s electric vehicle maker has still seen its shares surge roughly 200% since the last stock split in August 2020.
Stock splits don’t impact a company’s market value, but evidence suggests that by making shares more affordable to retail investors, the move does often provide a short-term boost to share price.
Tesla shares are up roughly 25% since announcing the 3:1 split in early June, while news of Tesla’s 5:1 stock split roughly two years sent shares over 70% higher in the 20 days following the announcement.
Several other major tech companies have announced stock splits this year and saw subsequent spikes in their share price; Google-parent Alphabet’s split 20:1 in February and Amazon’s stock split 20:1 split one month later.