ACC556 Week 8 Discussion – Stock Split or Dividend

Please respond to the following:

Differentiatebetween a stock split and a stock dividend. As the financial managerfor Tesla Corporation, which would you recommend for Tesla? Providesupport 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 thatAmazon bought Whole Foods! So, a stock split is like breaking a bigpizza into smaller slices. Even though you have more slices, each one issmaller, 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 eachslice is worth half as much. A stock dividend is like getting a littleextra 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, butthe value of each share dropped. Looking back, this move by Tesla waspretty good for my investments. More people could afford to buy Teslashares because they cost less after the split. It also made Tesla morepopular with regular folks like me who were still new to investing inthe stock market at that time.Now, if we’re thinking about doing it again, it would bewise to check the situation now. We need to see if it fits with whatTesla wants to do and if it’s good for all the people who own Teslashares, including me. Analyzing everything carefully will help us decidewhat’s best for Tesla and everyone invested in it, like myself.

Thanks for reading.

DJ