ACC556 Week 8 Discussion – Stock Split or Dividend

Please respond to the following:

• Differentiate
  between a stock split and a stock dividend. As the financial manager
  for Tesla Corporation, which would you recommend for Tesla? Provide
  support for your rationale.

Be sure to respond to at least one of your classmates’posts.

Hi, Professor and Class.

I took a class on this very subject around the time that
Amazon bought Whole Foods! So, a stock split is like breaking a big
pizza into smaller slices. Even though you have more slices, each one is
smaller, but it is still the same pizza overall. In a 2-for-1 split,
for example, you get two slices for every one you had before, but each
slice is worth half as much. A stock dividend is like getting a little
extra pizza for free. If you had 10 slices and there’s a 5% dividend,
you get half a slice extra for free.

As for Tesla, in 2020, they did a 5-for-1 stock split.
This means for every Tesla share I had, I got five shares in return, but
the value of each share dropped. Looking back, this move by Tesla was
pretty good for my investments. More people could afford to buy Tesla
shares because they cost less after the split. It also made Tesla more
popular with regular folks like me who were still new to investing in
the stock market at that time.

Now, if we’re thinking about doing it again, it would be
wise to check the situation now. We need to see if it fits with what
Tesla wants to do and if it’s good for all the people who own Tesla
shares, including me. Analyzing everything carefully will help us decide
what’s best for Tesla and everyone invested in it, like myself.

Thanks for reading.

DJ