- Tesla stock jumped 12% on its first day of trading after the split on Monday.
- The electric vehicle maker announced on Aug. 11 that it would conduct a 5-to-1 stock split and began trading at the new price on Monday.
- Still, the automaker’s rally hasn’t slowed down. Shares are up over 470% this year.
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Tesla jumped 12% Monday to $ 497 a share on the company’s first trading day after the stock split, extending the automaker’s meteoric rally.
The company announced on Aug.11 that it would adopt a 5-to-1 stock split after its recent rally pushed stocks above $ 2,000 apiece. Since the announcement, Tesla shares have added more than 70%, even though a stock split doesn’t change a company’s underlying fundamentals.
Read more: 35-year market veteran David Rosenberg warns the stock rally has distortions that were glaring during the tech bubble – and exposes his plausible crash scenario
Nonetheless, the split could encourage more small investors who couldn’t afford the pre-split price of the stock.
“We believe the decision to split the shares was a smart move on the part of Tesla and its board given the parabolic movement of stocks over the past six months,” wrote Wedbush analyst Daniel Ives in a Monday note. He adjusted his price target on Tesla shares to $ 380 with a bullish deal of $ 700 and reaffirmed his neutral rating after the split.
Also on Monday, Apple shares gained after its own 4-for-1 stock split took effect. This is the company’s fifth stock split.
Tesla has gained more than 472% since the start of the year.