Shares of Tesla soared 6.5% in extended trading on Tuesday after the electric car maker announced a 5-for-1 stock split. This means that shareholders of record date Aug. 21 will receive an additional four shares for each stock held. Trading on a split-adjusted basis will begin on Aug. 31.
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Tesla (TSLA) stated that the move will make its stock more accessible to its employees and investors. Year-to-date, the electric vehicle maker’s shares have already gained almost 229%.
On July 28, Bernstein analyst Toni Sacconaghi downgraded the stock to Sell from Hold citing its high valuation. In a note to investors, Sacconaghi said that “Despite our relatively bullish stance on electric vehicle evolution, and structural advantages we believe Tesla may hold, we find it difficult to justify Tesla’s current valuation even under our most bullish/imaginative scenarios.” The analyst reiterated his price target of $900 (34.5% downside potential).
Overall, Wall Street analysts are sidelined on the stock. The Hold consensus is based on 13 Holds, 11 Sells and 4 Buys. Following this year’s fast stock rally, the average price target of $1,242.69 implies downside potential of about 9.6% to current levels. (See TSLA stock analysis on TipRanks).
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