Tesla’s stock jumped as much as 6% in after-hours trading Tuesday after the company announced a five-for-one stock split, set to go into effect on August 31.
A stock split creates more shares of a company without changing the underlying dollar value of any single investor’s holdings. By increasing the number of shares available, the company can attract new investors who might otherwise be put off by the high price of a single share.
Tesla’s stock is on a roll this year, despite challenges presented by the coronavirus pandemic. Shares have risen more than 200% since January to $1,374, and its market capitalization has surpassed the likes of Disney (DIS), Toyota (TM) and Coca Cola (KO).
Apple (AAPL) also announced a stock split last week — its stock has climbed more than 45% this year. The two companies’ success mirrors the overall strong performance of the tech sector in a year that has been turbulent for Wall Street.