Tesla Inc., stocks took a hit after the electric carmaker revealed that the Board of Directors approved of a Tesla stock split on August 5.
Following months of speculation, Tesla shareholders voted for the proposed 3-for-1 Tesla stock split on August 4, and approved it with an overwhelming majority. The Tesla stock split date is set to August 24.
Tesla Stock Split Vote
Tesla first revealed its plan for a stock split in a regulatory filing in March. The timing seems to have worked perfectly for the company as stocks have been in recovery these past few months.
The Tesla stock split date has been set for August 24 for all shareholders on record as of August 17. The electric carmaker announced the news in a statement. “Tesla, Inc. (TSLA) (“Tesla”) announced today that the Board of Directors has approved and declared a three-for-one split of Tesla’s common stock in the form of a stock dividend to make stock ownership more accessible to employees and investors. Each stockholder of record on August 17, 2022 will receive a dividend of two additional shares of common stock for each then-held share, to be distributed after close of trading on August 24, 2022. Trading will begin on a stock split-adjusted basis on August 25, 2022.”
During the meeting on Thursday, Tesla CEO Elon Musk commented that following the split, Tesla’s stock value could increase substantially making it the world’s most valuable company.
Tesla stock is down by nearly 20% this year although it has gained over 200% since its last stock split. Industry experts believe that stock splits are good to drive up interest in the company and help raise more capital.
Roth Capital Partners analyst Craig Irwin told Bloomberg that Tesla’s stock split timing looks impeccable as the market seems to be heading in the right direction.
The last Tesla stock split was done two years ago, in August 2020. At the time, the Tesla shareholders had voted for a 5-for-1 split. The company wanted to reduce the price of its stocks so that it is more affordable for employees and investors. After declaring a Tesla stock split on August 11, the company saw its stock price rise by more than 80% between August 11 and August 31. This is a good indication of what to expect in the coming days.
Tesla Earnings & Performance
Last month, Tesla reported its second quarter earnings that largely beat analyst expectations. Production took a hit as it was forced to shut down its factory in China due to Covid restrictions, along with other supply chain disruptions. Tesla’s quarterly revenue rose 42% from a year ago to $16.9 billion, though it fell from a record high of $18.7 billion in the previous quarter.
Musk was recently quoted as saying that he has a “super bad feeling” about the economy and revealed that he will be laying off nearly 10% of the workforce as he tries to secure the future of the electric carmaker.
According to Refinitiv data, Musk owns about 15% of total Tesla shares after selling millions last year. Tesla shares had taken a hit after Musk announced his plan to buy Twitter. But they rose marginally after it was revealed that Musk plans to scrap the $44 billion-dollar deal. Tesla shareholders had publicly expressed concerns about the CEO’s ability to run the EV company while owning Twitter.
In the latest meeting, Musk told shareholders that Tesla recently hit a milestone in production – it just crossed the three million mark. He also admitted that the company is attempting to achieve a two million vehicle run rate by the end of the year.
The Tesla stock split will help bring the high-net stock within reach of the average investor.
