Tesla Inc (TSLA.O) will seek investor approval to expand its number of shares to permit a stock split in the form of a dividend, the electric-car maker announced on Monday, sending its shares up around 5 per cent. The plan came as the firm paused its Shanghai facility amid COVID-19-related lockout restrictions and its artificial intelligence chief took a sabbatical as the company strives to attain complete self-driving capability this year.
The idea, first published on Twitter, has been accepted by its board and shareholders will vote on it at an annual meeting. The stock split, if granted, would be the latest after a five-for-one split in August 2020 that made Tesla shares cheaper for its employees and investors. Alphabet Inc (GOOGL.O), Amazon Inc (AMZN.O), and Apple Inc (AAPL.O) have recently split their shares to make them more accessible following a pandemic-induced rally in technology equities.
Tesla’s stock price soars after its 2020 stock split. Tesla shares surge after the stock split in 2020
Tesla shares surge after the stock split in 2020 Tesla shares surge after the stock split in 2020
Since the shares split in 2020, they have climbed 128 per cent, raising the company’s market capitalization past $1 trillion and making it the biggest U.S. automaker by that measure.
CEO of investment analysis firm New Constructs David Trainer said the stock split could exacerbate the bubble in Tesla’s stock that has been forming over the past two years.
Tesla has delivered roughly a million electric cars annually while expanding production by opening up additional factories in Austin and Berlin amid COVID-19-related difficulties and increased competition.
Tesla in Buffalo
Tesla takes over the first cars made at a new plant in Gruenheide
Tesla Gigafactory in Gruenheide, Germany, is scheduled to open on March 22, 2022, with a ribbon-cutting event featuring Model Y automobiles.
Tesla on Monday alerted its suppliers and staff that its Shanghai facility in China will be shuttered for four days as the financial hub stated it would lockdown in two stages to conduct widespread COVID-19 testing.
Tesla is proposing a stock split to pay dividends to shareholders, and the stock price rose today
It was revealed Monday that Tesla intends to split its stock to distribute a stock dividend across the company’s owners.
The Securities and Exchange Commission filing said the electric car company will ask at its annual shareholder’s meeting “for an increase in the number of authorised shares of common stock … to permit a stock split of the Company’s common stock in the form of a stock dividend.”
Instead of cash, owners receive additional company shares as part of a stock dividend. These payouts do not change the value of a corporation, but they dilute its share price. In other words, if there is a 6-for-1 split, investors will get a stock dividend of five shares for every one share of Tesla they own. This would only happen once. More than 6% of Tesla’s shares were trading higher at roughly $1,075.
Tesla is searching for shareholder permission for a “stock dividend,” which, despite the term, is much more like a small stock split than it is like a normal cash dividend. Whether or not it is allowed will depend on whether or not it brings any benefits to shareholders.
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Tesla Is Attempting a Second Stock Split in Less Than Two Years
NEW YORK — Shares of Tesla soared at the opening bell Monday after the electric car maker announced its second stock split in less than two years. The firm said in a regulatory filing, and also in a tweet, that it wants to propose an upcoming annual shareholder meeting to expand its number of authorised shares so that it can split the stock in the form of a dividend.
Tesla Intends to Divide Its Stock Once More shortly
Tesla is asking its shareholders for permission to split its stock for the second time in two years.
Shareholders would get additional shares as a dividend as a result of the split. Investors receive most of their dividends in cash. The electric car firm did not disclose details about how many shares investors would receive. Its previous split in August of 2020 awarded stockholders five shares for every share they own.
Tesla stock struggled in the early part of this year but has been on a run since the firm revealed it gained German government approval to deliver the first cars made at its new factory outside of Berlin.
Shares are up 32 per cent since closing at $766.37 just two weeks ago. The stock price on Friday was $1,010, putting the company’s market capitalization back over $1 trillion.
Tesla Shares Climbed 8 Percent in Early Trading
Several other high flying tech stocks have announced splits recently, including Amazon (AMZN) and Google owner Alphabet (GOOG) (GOOG). Both disclosed plans for 20-for-1 stock splits since the start of February. The timing of the Tesla split is also not known, as the date of this year’s shareholders’ meeting, at which there will be a vote on the plan, has not been announced. Last year the shareholders’ meeting was held on October 7. Stock splits do not fundamentally impact the value of a company.
But since they cut the price that shareholders need to pay to buy a single share, they can raise demand, and therefore the price. Tesla’s stock rose 12.6% on the day of the last five-for-one split. And shares have more than doubled since that time. But the split came amid an unprecedented run for Tesla shares, which gained 743 per cent in 2020. According to Wedbush Securities’ Dan Ives, the stock’s performance since the last split made the split inevitable.
Amazon’s Stock Is Poised to Get Much, Much Cheaper
Amazon’s stock is poised to get much, much cheaper
The importance of a stock split has waned due to the availability of index funds and exchange-traded funds (ETFs) that allow retail investors to purchase a fraction of a share of a company with high stock prices. Except for Berkshire Hathaway, most corporations are wary about allowing the price of their shares to rise excessively. Shares of Tesla would be worth more than $5,000 each without the original split.
When compared to major automakers like Ford and General Motors, Tesla is still a dwarf in the automotive industry. But its quick growth the firm expects annual sales increases of 50 per cent or greater — and the belief that Tesla is prepared to cash in on an industry-wide move from internal combustion engines to electric vehicles, have spurred remarkable gains in market value.
Tesla’s stock has risen 1884 per cent through Friday’s close since its surprising profit in October of this year changed the company’s quarterly loss pattern. Tesla is currently worth more than the combined value of the world’s 13 top manufacturers.
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