Another big name in the market has decided to make its stock more accessible to the everyday investor.
And that big name is none other than Tesla Inc. (NASDAQ: TSLA).
Tesla has indeed had an impressive run. Despite many analysts calling for its downfall, the electric car stock has continued to thrive, hit new all-time highs, and continues to climb daily. In fact, shares have more than quadrupled since March – closing above $1,600 at one point.
The company has been a favorite stock for day traders as well as for some retail traders for a while. For instance, just last month, Robinhood disclosed that almost 40,000 active account holders had added shares of the carmaker in a four-hour time frame.
And it's not just Tesla that's enjoying this surge. Investors are getting more and more interested in the electric car industry. But Tesla is the only company in the sector that's on the S&P 500's radar, with many hoping it'll soon be added to the coveted list. If this happens, it'll make Tesla a "must buy" for mutual and exchange-traded funds that track the index.
TSLA's 5-for-1 Deal: Where's the Money?
With Tesla's high price tag, it can almost seem unreachable – especially seeing how it continues to climb daily. The company, however, made a recent announcement, and the goal is to make the stock more accessible to the everyday investor.
Following the news that it had officially become the world's most valuable automaker, Tesla revealed that it would be doing a 5-for-1 split.
What this means is that on Aug. 21, each stockholder will receive a dividend of four additional shares of stock for each one they own. Following the announcement, TSLA stock surged 9.3% as investors rushed to get a piece of the electric car maker ahead of the split.
I think splitting stock is the best thing TSLA could have done.
Truthfully, every single stock worth over $400 should do a stock split to get their price under $100. Because while the market capitalization is the same, retail investors see a smaller price tag, therefore making it possible for them to own a piece of the company.
And it's been proven that in many cases, the stock moves higher after a stock split because the cheaper price tag naturally attracts an influx of interest.
So, Tesla, I tip my hat to you.
With that said, I have always considered the world's top electric car maker as a buy. And with this announcement, I believe we're just going to see more and more investors running to get their piece of the pie. So, I'm giving Tesla the green light for purchase.
This is a stock you simply don't want to miss.
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About the Author
Andrew Keene, editor of the 1450 Club, Super Options, and Project 303 at Money Map Press, is a globally known trader and a renowned expert on all things options.