With Tesla announcing a 5-for-1 stock split on Tuesday, the move may help attract younger investors to the company, according to CNBC’s Jim Cramer.
The host of “Mad Money” said on Wednesday the stock split set to take place at the end of August, which will end up lowering the price of a single Tesla share, may get younger investors to look at buying individual stocks.
“Any value in the stock that’s created by this is false,” Cramer said on “Squawk Box.” “But I think the idea of getting newer, younger people involved into the stock market who aren’t just brainwashed to put money into index funds is terrific,” he added.
“It shouldn’t create wealth, but it can create new people coming in and boy, do we ever need that,” said Cramer.
According to Cramer, psychological barriers still exist for retail investors when stock prices for major tech companies such as Google-parent Alphabet and Amazon trade at nearly $1,500 USD and $3,100 USD per share, respectively.
“It’s just a price tag people can’t get used to so they don’t buy and therefore miss the run, say, from $300 or $400,” Cramer added. He did caution against purchasing Tesla ahead of its stock split.
Cramer reiterated smaller investors are valued, as “The best kind of shareholder you can have is an investor small person who wants to stick around, so I am all for this.”
Other notable stock splits coming soon are Apple, which previously announced a 4-to-1 stock split during its recent Q2 earnings, similarly set to kick in at the end of August.
As of writing, shares of Tesla are trading at $1,559.83 USD, up a whopping 13.49% for the day.
