Tesla To Split Stock 5-for-1

Elon Musk pull's a Tim Cook, announcing a 5-to-1 stock split for its overpriced stock....

https://www.cnbc.com/2020/08/11/tesla-announces-five-for-one-stock-split.html

Musk, you sly dog, you.

Sure it doesn't matter that the share splits do absolutely nothing in driving actual tangible value. Even the theory that more retail investors will be able to buy and support the stock if the price itself comes down stands as a very weak argument in this age in which brokerages are all racing to provide fractional ownership.

At best, the most prevalent advantage that the stock split might offer would be for weighting in funds and indexes along with a reduced bid-ask spread for both the stock and its derivative option offerings. True, more liquidity could better help for price support when it comes to price discovery, but by and large stock splits are becoming an antiquated part of trading history.

But wow, the psychological effect continues to stand the test of time. The idea of getting five of something, for the price of one.... WOW! We are all victims of sensational headlines even in the face of rationality's absense.

I, for one, believe that the Millenial base that continues to prop this company will continue to propel this company's stock just a little bit higher in the face of this new trading parlor trick. After all, many of the people who now own Tesla are likely to be financially illiterate when it comes to market capitalizations to even consider that a stock's price may have absolutely no bearing of what the company's market value actually is....

Posted Using LeoFinance