Tesla Stock Split 2021: Will Elon Musk Take the Bear Challenge Again?

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Nov. 2 2021, Published 8:17 a.m. ET

Tesla stock has been on a tear. After trading on a weak note for the last six months, the stock has risen to a new record high and is up 71 percent for the year. Many people wonder whether Tesla will split its stock. Incidentally, long-time Tesla bear Gordon Johnson of GLJ Research has said that he expects the company to split its shares. When will Tesla stock split?

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Tesla announced a five-for-one stock split in August 2020. The stock surged after the news and continued to rally in the year. The stock rose 42 percent between the split date and the end of the year.

Tesla 2020 stock split

The 2020 split was the first in Tesla’s history and came after a splendid rally that started in November 2019. The company announced the split on August 11, 2020, after the close of markets. The stock closed around $1,374 on the day but rose over 13 percent the next day as markets gave a thumbs up to its split announcement.

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Tesla stock continued to rise between the split announcement date and the actual split, which became effective on August 31, 2020. The rally didn't stop there and Tesla stock continued to hit new record highs. Overall, the stock gained 740 percent in the year due to the year-end rally after President Joe Biden’s election win. Tesla's inclusion in the S&P 500 also helped the stock move higher.

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Will Tesla stock split again?

Tesla stock has crossed above $1,200 and is only about 12 percent lower than the price levels when the company announced the split in 2020. Johnson, who's among the most vocal Tesla bears, thinks that there's a high probability of Tesla splitting the shares.

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Now, fundamentally, a stock split doesn't change anything as the earnings fall in proportion to the split. That said, it does help increase liquidity. Also, it makes the stock appear “cheap” and affordable to a lot of retail traders. Generally, it's seen that stocks go up on the split announcement.

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Will Elon Musk split Tesla stock?

Tesla CEO Elon Musk hasn't shied away from taking bears head-on. From his famous short shots to his public spat with short-seller David Einhorn, Musk has been taking on bears and short sellers in his very own “Musk way.”

Incidentally, in 2020, Michael Burry mocked the steep rise in Tesla stock and called on Musk to do another stock issuance. Musk seemed to have taken the challenge and announced another $5 billion stock sale, which was the company’s third stock offering of 2020. Overall, Tesla raised $13 billion in the year even though it didn't really need the funds.

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Burry revealed a short position in Tesla but has since closed the position. Shorting Tesla hasn’t been a very profitable trade and bears have lost billions of dollars betting against the Musk-run company.

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When will Tesla stock split?

We don’t have a timeline for the Tesla stock split. However, looking at the continued momentum in Tesla stock, a split might happen sooner than later. Amazon had three stock splits between 1998 and 1999. Although Musk hasn’t been too friendly with Amazon CEO Jeff Bezos and also called him a “copycat,” it wouldn't be surprising if he takes a leaf out of what Amazon did two decades ago.

While bears might frown at Tesla’s $1 trillion valuation, the company deserves credit for its execution including delivering a record number of cars while elsewhere automakers, big or small, are struggling with securing chips to build cars.

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