A stock split for a rapidly growing company can be a catalyst for its shares. Even though the split doesn’t really change anything, a lower price can make a stock more attractive to some investors and make it eligible to be included in certain indexes and funds that track them.
Shares of Tesla Inc. TSLA were up 5% in early trading March 28 after the company said it would ask shareholders to approve a plan to increase its number of shares. Tesla said the move would be needed “to enable a stock split.” The answer is that the consensus 2022 earnings-per-share estimate for Tesla, among analysts polled by FactSet, has increased 24% to $10.87 from $8.78 at the end of 2021.
A look at consensus sales-per-share and EPS estimates for Tesla and the index illustrates how much more growth analysts expect for Tesla: