Topline
Electric car maker Tesla will seek shareholder approval for a stock split, according to an SEC filing Monday, driving shares up as it vies to join tech giants like Amazon and Alphabet in splitting stock after massive growth during the pandemic.
Key Facts
Tesla said it will ask its shareholders to approve plans to increase the number of shares of common stock “in order to enable a stock split” at an upcoming annual meeting.
The company’s board has already approved management’s plans to increase the amount of stock, but any split is subject to the board’s final approval, according to the filing.
Tesla shares were up nearly 6% in pre-market trading on Monday morning after the announcement.
Key Background
Tesla’s proposal follows similar moves from Amazon and Google parent Alphabet in recent months. Stock splits increase the total number of shares while decreasing the individual value of each, with investors receiving additional shares for each they hold. This means the market value of the company remains the same but shares are more accessible to retail investors and more easily traded. Stock splits can also boost trader optimism, driving share prices up. Tesla has soared in value over the last few years and the company announced a 5-for-1 (if you have one share you would receive four more after the split) split in mid-2020. Since then, Tesla stock has more than doubled in value.
Tangent
Tesla is the fastest-growing U.S. automaker and a leading seller of electric vehicles. It reported record deliveries in the final quarter of 2021 and opened a sprawling “Gigafactory” in Germany last week after lengthy delays, which should help the company’s growth in Europe and reduce its reliance on its Chinese plant. Tesla has reportedly suspended production at its Shanghai factory for four days due to a staggered Covid-19 lockdown in the city, according to Reuters. The company’s chief executive, billionaire Elon Musk, said he has “supposedly” contracted the virus for a second time.
Further Reading
Tesla Says It Delivered Record 936,172 Electric Vehicles In 2021 (Forbes)
Alphabet’s Historic Stock Split Means More Investors Can Buy Shares—But Here’s What Analysts Say (Forbes)
Elon Musk Says He ‘Supposedly’ Has Covid Again (Forbes)
