Shares of the electric-car maker, led by Elon Musk, opened at $302 and dipped to $293 in early trading.
Tesla’s second stock split in as many years follows those by other high-growth companies, including Amazon.com and Google-parent Alphabet, and highlight the increasing need to diversify investor base.
Stock splits “certainly have a higher appeal to retail investors, and makes their options more affordable as well,” said Art Hogan, chief market strategist at B. Riley.
“Retail investors are a very important cohort for Tesla, and today’s stock split is essentially an acknowledgment of that fact.”
Austin-based Tesla had debuted at $17 in 2010 and shares sky-rocketed to trade at more than $2,000 at their peak, becoming among the highest priced on Wall Street and making it difficult for small investors to bet on the high-growth stock.
In August 2020, the company decided to split its stock on a five-for-one basis, and breached the $1 trillion in market capitalization in 2021.
The stock closed at $891.29 on Wednesday before the three-for-one split took effect.
The EV maker is the sixth company in the S&P 500 index to have split its shares this year, according to Howard Silverblatt, senior index analyst for S&P and Dow Jones indices.
Tesla’s ticker was trending on social media stocktwits.com, indicating increased chatter among individual investors.
The company’s shares have fallen about 11% since the company announced in March plans to increase its number of shares.
“In typical buy-the-rumor, sell-the-news style, investors tend to drastically scale back purchases of splitting stocks in the weeks ensuing the effective split date, causing price momentum to slow,” analysts at Vanda Research said in a note.
A stock split does not affect the fundamentals of a company, but makes it easier for individual investors looking to do small trades. However, the benefits of stock splits are becoming less clear as brokerages let customers buy parts of a company’s share.
Tesla’s shares have fallen about 16% this year as worries over aggressive U.S. interest rate increases and geopolitical uncertainty triggered a sell-off in high-growth stocks.
The latest three-for-one split means that stockholders will get two additional shares for each they owned as of Aug. 17.