Stock splits were all the rage on Wall Street last summer, with companies like Alphabet, Amazon, and even Tesla (NASDAQ: TSLA) participating in the frenzy. Although stock splits might not significantly impact a company's valuation, they can serve a purpose, including attracting more retail investors to purchase shares at a reduced price.

Tesla, the automotive and clean energy company, is one company that might consider another stock split, as it trades for nearly $300 per share. Let's explore what happens when a company splits its stock and whether Tesla might do it again soon.

A stock split occurs when a company increases its outstanding shares while keeping the total market capitalization unchanged. To provide an analogy, imagine a pizza: Whether you divide it into eight or 16 pieces, it remains the same-sized pizza.

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Source Fool.com