Tesla plans 2nd stock split in less than 2 years
Shares of Tesla jumped Monday after the electric car maker announced its second stock split in less than two years.
The company said in a regulatory filing, and also in a tweet, that it plans to make a request at an upcoming annual shareholders meeting to increase its number of authorized shares so that it can split the stock in the form of a dividend.
It did not say when a split would occur or the ratio of such a stock split, but it would follow similar maneuvers by a trio of tech companies that have seen their shares soar in recent months.
Tesla's stock price rose $81.02, or 8%, to $1,092.37 in afternoon trading. The shares are up more than 60% over the past year. In January, company posted record 2021 results, including net income of $5.5. billion. That was more than seven times its previous high for earnings of $721 million in 2020.
And the company is growing. CEO Elon Musk opened Tesla's first European factory last week, a "Gigafactory " in Germany that will employ 12,000 people and produce 500,000 vehicles a year.
"Given the stock's meteoric run it's not a surprise that Musk & Co. are heading down the path of another stock split especially with robust EV demand and the build-outs of the flagship Berlin and Austin Giga factories now on a glide path, said Dan Ives, who follows Tesla for Wedbush.
Ives, who forecasts Tesla shares to reach $1,400 over the next 12 months, said in a report that shipments of Tesla vehicles are "trending well ahead" of projections by Wall Street analysts. One obstacle for the company, as well as other automakers, that could temper its financial performance is an ongoing shortage of semiconductors resulting from global supply disruptions.
A stock split does would change the price-per-stock, but not the overall value of those holdings. It can push up the price of a company's stock, at least temporarily, and the announcement did just that on Monday.
Tesla said that its board has greenlighted the proposal, but that the dividend is contingent on final board approval.
Tesla had a 5-for-1 stock split in August 2020, which went into effect one day after the company announced that it planned to sell up to $5 billion worth of its stock. Just three months later Tesla said that it was planning another stock sale, looking to raise up to $5 billion in that offering.
Tesla follows other tech giants that have seen the price of shares vault out of reach of most investors. Alphabet, Google's parent company, announced a 20-for-1 split in February Amazon.com Inc. said this month that it would do a split of the same ratio.
"We view Tesla's move following the likes of Amazon, Google, Apple and initiating its second stock split in two years as a smart strategic move that will be a positive catalyst for shares going forward," Ives wrote in a research report.
In a filing with the Securities and Exchange Commission, Tesla said it would include more information, including the date and place of its annual shareholder meeting, in an upcoming proxy statement.
