Today, Tesla TSLA -0.8% stock traded for the first time since splitting 5-for-1 last Friday. The company’s shares rose by $55.64, a 12.6% increase, to $498.32, taking the company’s market capitalization to a record high.

Tesla announced the stock split on August 11, and since that date its shares have increased by 81%, while in contrast the S&P 500 increased by 5%.

To place Tesla’s stock split into context, with a view to sorting out what Tesla’s stock split signals, and for that matter does not signal, consider some key insights from behavioral finance.

In contrast to the approach in traditional finance, which emphasizes that stock splits are essentially cosmetic changes with no major financial impacts, behavioral research has documented that stock splits tend to feature real subsequent effects.

Leave a Reply

Your email address will not be published. Required fields are marked *