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Tesla shares will split on August 24

Artwork by Elias Stein


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gave investors something to look forward to this week: a three-for-one stock split. At the close of trading on August 24, Tesla shareholders will receive a “dividend” of two additional shares. The next day, Tesla stock will start trading at the new price, which is one-third of what it was before.

It may amount to little more than cutting the pizza into several slices, but individual investors often eat a bite-sized pie. A study found that stocks announcing splits typically beat the market by 16 percentage points over the next 12 months.

The allure is clear: Tesla shares, recently at $860, will now carry a price closer to $285, which is no small difference for retail investors.

Small investors matter to Tesla. Approximately 46% of shares available for trading are held by non-institutional investors. The comparable number for, say,

Alphabet

is 15%.

Additionally, stock splits can signal management’s optimism about the future. No company splits a stock it expects to see go down.

The last time Tesla split its stock — five-for-one in August 2020 — shares were up 81% between announcement and stock trading on a new split-adjusted basis.

It’s hard to see that repeat itself. For starters, investors have known about this split for months, and stocks are up nearly 25% in the past month and 40% since their 52-week low in May.

Yet with Tesla shares, investors can never be sure what will happen next.

Next week

Monday 8/15

The national association of Home Builders releases its Housing Market Index for August. The consensus estimate is for a reading of 53, slightly lower than July’s reading of 55. Not only has the index fallen every month this year, but July’s 12-point drop was also the second steepest in the index history. Homebuilders say affordability, production bottlenecks and rising inflation are headwinds in the market.

The Federal Reserve The Bank of New York publishes its Empire State Manufacturing survey for the month of August. Expectations are for a reading of five, six points lower than in July.

tuesday 8/16

walmart

announces results for the second quarter of fiscal 2023. The company’s shares fell 11.4% after its previous earnings report in May, when it cut its profit forecast. It was the biggest one-day drop for the stock since October 1987.

Agilent Technologies and

Home deposit

communicate quarterly results.

The Census Bureau reports new residential data for July. Economists forecast a seasonally adjusted annual rate of 1.53 million new housing starts, about 30,000 less than in June. Housing starts have fallen about 10% since the start of the year.

Wednesday 8/17

Amcor
,

Analog devices
,

Bath and body care
,

Cisco Systems
,

Keysight-Technologies
,

Lowe’s, Synposis, Target and

TJX

Cos. earnings release.

The Federal Free Market The Committee publishes the minutes of its monetary policy meeting at the end of July. The FOMC raised the federal funds rate by 75 basis points, to 2.25%-2.5%, at this meeting.

The Census Bureau reports retail sales data for July. Consumer spending is expected to rise 0.2% month over month. Excluding automobiles, retail sales are considered stable. That compares with a 1% jump for both metrics in June. The consumer has shown resilience despite high inflation for four decades, supported by a historically strong job market.

Thursday 8/18

Applied materials
,

Estee Lauder
,

Ross Stores
,

and

Tapestry

hold conference calls to discuss quarterly results.

The conference board publishes its main economic index for July. Consensus estimates a 0.3% month-over-month decline, following a 0.8% decline in June. “The U.S. LEI fell for a fourth consecutive month, suggesting that economic growth is likely to slow further in the near term as recession risks increase,” said Ataman Ozyildirim, senior director of economic research at The Conference Board.

The national association of Realtors reports existing home sales for July. Expectations are for a seasonally adjusted annual rate of 4.85 million homes sold, 270,000 less than in June. Sales of existing homes have fallen for five straight months.

Friday 8/19

Deere

announces results for the third quarter of fiscal 2022.

Write to Al Root at [email protected]