Tesla Inc has announced a 5-for-1 forward stock split in its shares of common stock, effective before market open on Monday, August 31, 2020.
As a Tesla shareholder myself, I received many questions related to the stock split recently and I think it will be helpful to share the guidelines from my broker, TD Ameritrade. These will help to answer many of the questions people are asking.
Here's What You Should Know
- The 5-for-1 forward split means that for every share of Tesla common stock you own on or before the market open on August 31, you'll receive five shares of (new) Tesla common stock to replace it.
- The stock price will be affected by this event: it will decrease to one fifth of what it was at the close of trading on Friday, August 28. When the markets open on Monday, August 31, your net position in Tesla will be equal to what it was before the split, plus or minus market movements.
- For example, if you own one share, and the price at market close on August 28 was $1,500, at market open on August 31 you'd own five shares, each worth $300.
- If you are trading options on Tesla, the number of contracts (calls or puts) will increase by five and the strike price will be adjusted by one fifth. For example, one call contract controlling 100 shares with a $1,500 strike price will now become five call contracts controlling 500 shares with a $300 strike price.
- Tesla will not be available for trading in Extended Hours Trading (EXT) on Friday night, August 28; Sunday night, August 30; or Monday morning, August 31.*
You don't have to do anything. This corporate action will happen automatically, and there will be no fees charged to your account for this change.
Legal Disclaimer --
This article is for informational purposes only. You should not construe any such information or other material as investment, financial, or other advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, or offer by Vincent Y, Tesmanian, or any third party service provider to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction.
Vincent Y holds Tesla, Inc., shares (TSLA) and has no plans to buy/sell any positions within 72 hours.
