Here’s what you need to know if your stock is being divided into two (or three, or four, or five).
The stock split does exactly what it does Sounds like: A stock is divided into many stocks, does not change the total value of the holdings of investors. They are simply broken down into more individual units.
So who benefits from the stock split?
Lowering the price of a company’s stock may put its stock in the sights of smaller, individual investors. That is good for company liquidity and creates more demand for company shares.
The price change will be even more dramatic at Tesla, which trades at more than $ 1,500 per share on Wednesday. Its 5-get-1 split, also established on August 31, will put an individual share in the $ 300 range.
That’s not exactly cheap yet, but it’s been a boon for both companies whose stock values have risen even more since they announced their move.