A company’s share price is becoming a notion of growing importance as a result of the retail trading revolution that we’ve seen in the past 2 years. Innovation-fueled topical stocks trading below $500 per share have been provided with a unique valuation premium from the now ubiquitous options market, with individual traders now able to easily access and these high-risk derivatives for little to no cost.

Amazon (AMZN Quick QuoteAMZN - Free Report) and Alphabet’s (GOOGL Quick QuoteGOOGL - Free Report) 20-for-1 respective stock split announcements in the first quarter of 2022, and Tesla (TSLA Quick QuoteTSLA - Free Report) is following suit.

The Race For Retail Traders

Stock splits are becoming bullish catalysts in this novel trading environment where attracting retail investors/traders has never been more important to a company’s performance than ever before. The democratization of the stock market (pioneered by Robinhood in the years leading up to the pandemic) gave individual investors power that they had never previously had (seen in the rise of r/WallStreetBets and related meme stocks like GME & AMC).

With millions of freshman option traders now participating in the market’s daily action, the affordability of trading 1-lot options (1 contract) is crucial for all stocks and has provided many leading next-gen companies with a public valuation edge over competitors.

Tesla’s Split

Retail investors are pouring back into Tesla (TSLA Quick QuoteTSLA - Free Report) following the trillion-dollar EV-innovator’s announcement that it would be requesting another 5-for-1 stock split, at its upcoming annual shareholders as its share price once again breaches $1,000 a share. If approved, this would be its second 5/1 split in less than 2 years (effectively a 25-for-1 share split once this one is inevitably approved).

Tesla has almost 1 billion authorized shares that it can utilize to raise capital at its currently frothy valuation.