The TESLA share price is testing the resistance of a channel formation as the company’s stock is set for a split at month end. The stock will split 5:1 on the 31st of August and shareholders in TESLA will receive 5 new shares for every 1 they held after this week. This implies the stock will then trade at a new price of around $400 but will still have the same market cap near $380 billion.
TESLA are not the only company preparing for a stock split as Apple will also see a 4:1 split at month end. Both companies have seen their share prices surge this year and TESLA’s valuation is now more than Toyota, GM and Ford combined. Apple are even larger with a market cap of $2.1 trillion and a share price up 71% year to date.
In its latest second quarter earnings release TESLA reported a profit of $104 million despite shutting down its factory in Fremont, California, for almost seven weeks due to COVID-19. The positive result meant that the company has now been profitable for four straight quarters for the first time in its history.
TESLA saw deliveries of 90,650 vehicles for the recent quarter, which was an increase over its 88,000 first quarter result. The company saw $6 billion in revenues, helped by $370 million in energy storage sales and $487 million in service income.
TESLA Technical Outlook
The TESLA share price closed at $2014.20 on Monday after falling on the day and the stock is testing the resistance of an uptrend channel that runs from the February high. If TESLA can see a close above this resistance then the advance can continue. If the market turns bearish then support will come in around the August 12 low of $1361 before the channel support at $1250.
Stock splits can have a psychological effect on investors with the company looking cheaper at $400 than $2000 and this could support the stock moving forward.