Tesla Stock Is About to Get Much Cheaper

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Tesla
Courtesy of Luis Villa del Campo (Flickr CC0)

There is a lot of buzz about Tesla stock right now, and for good reason. The company’s recent stock split has been a hot topic on Wall Street. Some investors believe that the move will benefit the company in the long run, while others are not so sure.

So, what exactly is a stock split and how could it impact Tesla’s stock price? A stock split is when a company divides its existing shares into multiple new shares. This usually happens when a company’s stock price has become too expensive for investors to purchase. By splitting the stock, the company essentially makes it more affordable for investors.

The company has been on an incredible tear in 2018, notching up record profits and delivering some truly mind-blowing products. However, the share price has remained relatively high compared to the rest of the automotive industry – which may soon change. According to analysts at Goldman Sachs (GS), Tesla is facing imminent danger from cheaper competitors in both the electric car market and its own self-driving vehicle division. They believe that within 18 months’ time, General Motors (GM) will begin selling a significantly cheaper all-electric SUV than what Tesla currently offers and it won’t be long before other major automakers catch up too!

Stock prices have been on a meteoric rise in the last year or so, reaching all-time highs recently. This has been due to a combination of factors, chief among them being the booming electric car market, which is expected to grow exponentially in the coming years. However, this is not indefinite- it is possible that the market will turn and Tesla stock could go down significantly.

There are a few different ways that a stock split can impact a company’s stock price. First, it can increase the demand for the stock, since more investors will now be able to afford it. Second, it can also lead to more speculation and speculation can often drive up stock prices.

Tesla
Courtesy of Steve Jurvetson (Flickr CC0)

How to Protect Investors from a Stock Price Crash

First and foremost, never chase the stock prices. It is important to remember that Tesla stock is volatile and can go down significantly, even if the company is doing well. Anyone thinking of buying or selling Tesla stocks should use their due diligence and after getting advice from a financial advisor who is familiar with the stock market.

Secondly, have a diversified portfolio. Tesla stock is not the only factor that matters when it comes to financial security. Have a solid financial foundation on which to build. According to Investopedia, an individual’s portfolio with 30% in stocks is a good starting point in case Tesla stock goes down. Selling Tesla stock at a lower price and buying other stocks at a lower price will help an investor make more money.

When Is the Best Time to Buy or Sell Stocks

This is a difficult question to answer. While it is true that Tesla stock prices are volatile, it is also true that the market can move fairly quickly and without much notice. That being said, there are various factors that can indicate when the market is about to turn- for example, Tesla’s own financial reports. It is best to consult a financial advisor to see when the best time to buy or sell Tesla stocks will be.

It is important to remember that Tesla is a relatively new company and the market can move quickly.  They have announced that it will be splitting its stock into five. This move is seen as a way to make the stock more accessible to a wider range of investors.

This move is good news for investors who have been waiting for a chance to buy Tesla stock. It will also make it easier for current investors to sell their shares. For investors thinking about investing in Tesla, now is a good time to do so.

Written by Janet Grace Ortigas
Edited by Sheena Robertson

Sources
CNN Business: Tesla stock is about to get much cheaper; by David Goldman
CTV News: Tesla stock is about to get much cheaper; by David Goldman
Money: Tesla’s Stock Split Will Make Shares Instantly Cheaper for Investors; by Sarah Hansen

Featured and Top Image Courtesy of  Luis Villa del Campo‘s Flickr Page – Creative Commons License
Inset Image Courtesy of Steve Jurvetson‘s Flickr Page – Creative Commons License

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