“It’s the year of stock splits!” declared founder and CEO of Profit Jumpstater, Keisha Bailey. 

Financial Coach, Founder and CEO of Profit Jumpstarter, Keisha Bailey.

Electric vehicle manufacturer, Tesla, is the third US company so far this year to announce that it would be seeking a stock split. 

If shareholders approve, the split would be 6:1, and would be Tesla’s second stock split in as many years, having done a 5:1 split in August 2020. 

The decision also follows plans from Amazon and Alphabet, parent company of Google, to do 20-for-1 stock splits this summer.

A stock split allows a  company to increase the number of its existing shares by issuing more shares to current shareholders. In  the case of Amazon’s 20:1 split, shareholders will receive 19 additional shares for every one share they had.

A stock split also drastically lowers a company’s share price, making it easier for investors to purchase stock.  Amazon’s stock price will go from about US$3,300 down to US$165 while Alphabet will drop from roughly US$2,800 to US$140.

Tesla’s split will bring the price down from just over $US1000 to roughly $US166. 

Bailey noted that Tesla’s stock price rose by 43 percent in two weeks after dipping to the $700 range during the heights of uncertainties about Russia’s invasion of Ukraine.

She also noted that the rebound was seen across the US markets as talks of a resolution to the conflict in Eastern Europe seems to have allayed investors fears. 

The S&P 500 rose again last week to end the second winning week in a row.

“It seems to me that what’s happening is that we’re shaking off news about the war. It’s not as much an impact these days on the stock market performance,” Bailey explained.

The S&P 500  is a stock market index that tracks the performance of 500 of the US’s largest companies that are listed on stock exchanges across the country.

“[Prices] this most recent week were off straight to the moon because there are now talks of a possible resolution of the war,” she said, adding, “The US Federal Reserve has increased interest rates and so there is a general positive sense in the US stock market right now.”

However, Bailey warned that investors should still exercise caution when it comes to reentering the stock market as the situation in Eastern Europe is still fluid and can change at any moment.

-end-