Tesla 13% Higher Pre-Market Following Stock Split

7% Rally on Wednesday

Shares in the US alternative energy firm Tesla is trading over 13% higher pre-market on Thursday following an impressive 7% rally yesterday. The moves have come in response to news of a Tesla stock-split. This is essentially where a company divides the number of existing shares in the company into new, multiple shares. This, in turn, creates a lower entry price for new buyers.

The split has created a wave of fresh demand for Tesla shares which were already in high demand following a bumper Q2 earnings report. Tesla reported its fourth consecutive quarter of growth, despite the global pandemic, and posted a large earnings and revenues beat.

Following the stock-split, where pre-existing shares were split in five, shares in Tesla will now cost around $275 to buy. The wealth of new shares, at a heavily reduced price, has already seen a flood of demand. The 7% rise in value yesterday alone, has brought the company’s valuation up to roughly $272 billion.

Bumper Growth in Tesla Shares

Tesla share prices had soared from around $229 a year ago to $1500 ahead of the split. This reflects the massive demand for shares in Elon Musk’s company. Musk himself owns over 20% of the company, which equates to roughly a $55 billion holding. Musk’s personal wealth has increased by over $4 billion following yesterday’s rally. It is set to increase by around double that in line with pre-market prices today.

Tesla was one of the standout companies to report in the US Q2 earnings season. With a range of new vehicles due to be debuted later this year, demand for the company looks unlikely to wane anytime soon. The broader market conditions are also creating a favorable environment for investors. Furthermore, the broader equities landscape is well supported via the ongoing easing from the Fed.

Tesla Shares Rally Above Support Level

Following a brief dip below 1427.27, shares in Tesla have now rallied firmly back above the level. Prices are trading back up into the middle of the bullish channel which has framed the recovery from year to date lows. While price holds above the 1427.27 level, the focus is on the continued upside with a move back up to all-time highs at the 1793.97 level next.

Should price fall back below the 1427.27 level, the next support to watch will be the rising channel low ahead of the next major structural support area down at 964.53.