The company said on Tuesday that the share split would be done in the form of a dividend distribution that would give four additional shares of “common stock” to stockholders that had entered into by August 21. The stock split will take effect on August 28.
Stock splitting is usually done by companies as a means of encouraging small, retail investors to trade in their shares. Tesla’s stated goal is to “make stock ownership more accessible” to employees and investors. Shares of the company rose 6pc to $ 1,459 (£ 1,117) after news of the split surfaced.
This comes as Tesla has seen its share price rise by more than 200 since the beginning of the year, taking it to a height of around $ 1,500.
The rally surpassed its market capitalization by $ 250bn, while Musk, its chief executive, ranks among the top five richest people in the world with total assets of approximately $ 70bn.
The rapid run-up to Tesla’s stock has prompted a widespread belief that the company has fixed its previous manufacturing problems. It is also seen as moving beyond the luxury niche to widen the appeal of its vehicles with a range of new models.