Tesla choppy as investors await stock split

Yahoo Finance’s Emily McCormick joins Akiko Fujita to discuss what Tesla’s stock split will mean for investors.

Video Transcript

AKIKO FUJITA: Shares of Tesla hitting a new high in the session. But we are seeing the stock slide down about just over 2% now with about 90 minutes left to go in the trading day. Let's bring in Emily McCormick for the very latest on that. And Emily, we're highlighting it so much because there has been such a run-up as investors look to that five-for-one stock split at the end of the month. Do we know why it's down so much today or in the afternoon session? Is it just profit taking?

EMILY MCCORMICK: [INAUDIBLE] has bounced around quite a bit today. It did hit an intraday high. But at the low of the session, it was down as much as 6%. That's its biggest intraday drop that we've seen in about a month.

Now taking a look at this stock split, Tesla first announced that five-for-one stock split on August 11. At that point, shares had been trading at less than $1,400 per share. Now they're over $2,000. So that's good for an about 50% gain in just the past couple of weeks.

Now the split will, in theory here, make shares more accessible and affordable, especially to retail investors. They make up a good portion of the [INAUDIBLE] for Tesla shares overall. In Tesla's case, we will see the split adjusted stock price set to be in the hundreds of dollars rather than the over $2,000 it's been trading at recently.

Now under terms of this stock split, we'll see each Tesla shareholder of record as of last Friday, August 21, receiving four additional shares for every one share they hold. These will be distributed after market close this coming Friday. And trading will begin on that stock split adjusted basis next Monday, August 31.

Now arguably, what traders are betting on is that increased accessibility of Tesla shares will be a driver of demand for this stock, not only because of the stock split, but also because of speculation that Tesla will potentially be included in the S&P 500 after delivering a profitable second quarter earlier this year. So a couple things to keep in mind as well-- we do have Battery Day coming up in late September for Tesla as well, could potentially announce some new technology there. That also serving as a catalyst for the stock, Akiko.

AKIKO FUJITA: OK, thanks so much for that, Emily.