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The Tesla stock split experiment

Author

Listed:
  • Bradford Cornell

    (UCLA)

Abstract

On August 11, 2020, at 16:59 EDT, Tesla announced a 5-for-1 stock split. The trading in the after-market and during the subsequent 2 days amounts to a unique financial economic experiment. Although stock splits have no fundamental impact on value, Tesla’s stock price rose 17.94% in the 2 days following the split—adding almost $50 billion in market value. This paper examines that price increases in detail and concludes there is no rational explanation for the size of the run-up following Tesla’s stock split announcement.

Suggested Citation

  • Bradford Cornell, 2020. "The Tesla stock split experiment," Journal of Asset Management, Palgrave Macmillan, vol. 21(7), pages 647-651, December.
    • Handle: RePEc:pal:assmgt:v:21:y:2020:i:7:d:10.1057_s41260-020-00191-0
    DOI: 10.1057/s41260-020-00191-0
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    References listed on IDEAS

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