Investors seeking bullish plays on large cap companies with high prices received some good news yesterday. Amazon (NASDAQ:AMZN) has confirmed the approval of a 20-for-1 stock split. Essentially, someone who previously held one share of AMZN stock will hold 20 following the split. This type of news tends to get investors excited and often raises the question of if similar companies will follow the same path. Last month, Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) made headlines when it announced a stock split. In keeping with this trend, it stands to reason that Tesla (NASDAQ:TSLA) may be tempted to join this group. Such a decision could generate the jolt of momentum that TSLA stock needs.
TSLA Stock Split History
In August 2020, Tesla’s board approved a 5-for-1 split for TSLA stock. As the company stated, “Investors will receive a dividend of four additional shares for each share they own on Aug. 21. Those shares will be distributed after trading closes on Aug. 28 and the stock will begin trading on a ‘split-adjusted basis’ on Aug. 31.”
This decision came after Tesla managed to turn a profit in the previous quarter despite facing constraints imposed by the Covid-19 pandemic, surprising skeptical analysts. TSLA stock would continue rising steadily through the end of the year, demonstrating the type of growth that would come to define it. Despite a slight dip in March 2021, it quickly rebounded and kept moving upward, ultimately passing $1,222 per share late in the year.
What’s Currently Happening
2022 has been a fairly difficult year for TSLA stock so far. The company reported impressive delivery statistics and strong earnings for the previous quarter but has battled negative headlines and market forces. However, the company has also been expanding deliveries in Europe and recently gained approval to begin producing vehicles at its Berlin Gigafactory.
Today, Amazon’s stock split news has AMZN shares rising. Things haven’t been so good for Tesla, though. Electric vehicle (EV) stocks are down across the board. TSLA stock has fallen almost 5% for the day as of this writing. Fellow EV producers Rivian (NASDAQ:RIVN) and Lucid (NASDAQ:LCID) are down 5% and 8%, respectively.
With talk of a recession looming, investor confidence is generally low right now. In such times, negative market momentum is widespread, pushing down stocks as we’re seeing today. TSLA stock has been fighting hard to recover the ground it has lost throughout 2022. However, it has become clear that it will need a significant jolt to achieve the type of growth it needs.
When Will Tesla Split TSLA Stock?
With market forces being what they are, it could certainly be tempting for Tesla to consider breaking up shares again. Stock splits don’t generally help a company or share price directly. However, they do serve to lower the overall price of the stock, sometimes granting investors better access to companies with high prices per share.
This could generate the type of momentum that would help TSLA stock start rising, pushing it into the green until the company’s next important catalyst. Analysts remain generally bullish on AMZN stock following the split, noting that it has the potential to trigger a buying rush. AMZN’s performance today supports this hypothesis.
If that can happen for Amazon, it can happen for Tesla. Investors should watch carefully to see if the leader of the electric vehicle race follows the lead of the e-commerce conglomerate and opts for another stock split.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
