three-for-one stock split is approaching, and a milestone was crossed Wednesday—the record date.
The record date is, essentially, the day Tesla (ticker: TSLA) looks to see who its shareholders are. Investors have to be on that list to be eligible for the dividend.
But Tesla stock will probably trade 130 million shares between Wednesday and Aug. 24, when the ex-dividend date is reached—that is the day buyers are no longer eligible to get a stock dividend, or any dividend for that matter.
So what happens to buyers of Tesla stock over the next few trading days?
Nothing really. For starters, most investors aren’t on that list. A lot of stock is held in the name of brokerages. Holding stock in the “Street name” is common and helps eliminate the need for physical stock certificates. The broker keeps track of which clients own stock held in the broker’s name.
What’s more, people are allowed to buy and sell Tesla stock in coming days and still qualify for the dividend, until the ex-dividend date.
In the case of the Tesla split that date is Aug. 25. So people buying the stock Aug. 24 qualify. People buying Tesla stock on Aug. 25 don’t.
That doesn’t matter though. Shares will be trading at one-third the level of the 24th close. There is no arbitrage opportunity associated with a stock split.
That doesn’t mean investors don’t like stock splits. Bulls…
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