You could argue Tesla (TSLA) and Apple have a lot in common. Now, taking a leaf out of Apple’s playbook, Tesla has also enacted a 5:1 stock split and shares will begin trading on a split adjusted basis on August 31.
Tesla’s sensational run up has driven the stock to the lofty price of over $1,550 per share, seemingly out of reach from many investors looking to get a piece of the fast-expanding pie. Splitting the stock makes sense and should entice more retail investors.
Wedbush analyst Daniel Ives expects the canny move to pay off – both for nascent investors and the company.
“For Tesla given its strong retail base and growing appetite among investors around the story/overall EV demand, we believe this is a smart strategic move at the right time for the Board to make,” said the 5-star analyst.
Although essentially meaningless where value of the stock is concerned, a stock split has traditionally been a catalyst for further share gains in the year following the move. The Wedbush analyst expects the market’s recent parabolic rally to send other tech companies down the same path in the months ahead.
Ives believes the move will compliment other upcoming Tesla catalysts, both macro, such as the easing of lockdowns in Europe and the US, and more Tesla specific, such as the upcoming Battery Day, scheduled for September 22, when Ives expects the EV pioneer to announce “game changing” battery developments.
However, with “demand for Model 3’s ramping stronger than expectations in China heading into August/September,” Ives is in no doubt where Tesla’s biggest catalyst resides.
“While the stock has been rock solid,” the analyst concluded, “We believe the main fundamental catalyst continues to be the massive China market which is showing clear signs of a spike in demand for Musk & Co. heading into the rest of this year.”
All in all, Ives maintains a Neutral on Tesla shares alongside an $1,800 price target. What’s in it for investors? Upside of 9%. (To watch Ives’ track record, click here)
Tesla‘s surge has left most of the Street waiting on the sidelines. TSLA’s Hold consensus rating is based on 4 Buys, 15 Holds and 9 Sells. With a $1,291.15 average price target, the analysts expect shares to shed 22% of their value over the coming months. (See Tesla stock-price forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.