The Tesla stock split experiment

Bradford Cornell ()
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Bradford Cornell: UCLA

Journal of Asset Management, 2020, vol. 21, issue 7, No 9, 647-651

Abstract: 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.

Keywords: Stock split; Tesla; Market efficiency (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1057/s41260-020-00191-0

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