Tesla Announces 5:1 Stock Split

Electric carmaker Tesla Inc. (NASDAQ:TSLA) is splitting its stock.

The company run by Elon Musk announced that it will split its shares in a five-for-one exchange, a move designed to make the stock price less expensive for individual investors after becoming the world’s most valuable automaker.

Each shareholder of record on August 21 will receive a dividend of four additional shares of common stock for each share they own. Trading will begin on a split-adjusted basis on August 31. The stock split comes as Tesla’s share price surged in recent months, pushing the valuation of Tesla to $256 billion U.S., surpassing the value of Ford Motor Co. (NYSE:F) and Toyota Motor Corp. (NYSE:TM) combined.

With the stock price as high as $1,643 in recent weeks, the shares are beyond the reach of many smaller stock investors. Analysts praised the stock split as a timely decision to capitalize on Tesla’s recent stock price surge.

Tesla’s move follows a similar split by Apple Inc. (NASDAQ:AAPL). The iPhone maker announced a four-for-one stock split after the close of trading on July 30 and retail traders have piled into the stock in a bet on further gains.

Tesla has been a favorite stock for day traders and other retail investors, who have helped boost the shares to record highs. At one-point last month, nearly 40,000 Robinhood account holders added shares of the automaker during a four-hour period. In aftermarket trading Tuesday, Tesla rose as much as 8.4% to $1,490 U.S. a share.