Tesla To Undertake A 3:1 Stock Split
Tesla Shareholders have voted in favour of the company’s second stock split in as many years at its 2022 AGM.
How Will It Work?
Tesla’s plan is to split their stock 3:1.
Tesla stock closed at US$752.29 on July 8, 2022, the date it filed its proxy statement with the SEC. If the price is the same on the date of the split, each share would become three shares, worth US$250.76. Each shareholder would have three times the number of shares they had previously, with each share worth one-third of the price of a single share prior to the split. The total value of the investor’s Tesla position would remain unchanged.
Has Tesla Done This Before?
The Elon Musk-led car maker previously executed a five-for-one stock split back in 2020, a move that led to a 60% surge in the share price from the day of the announcement to the execution date.
What Was Tesla’s Stock Price When It Split In 2020?
Prior to Tesla’s 5:1 stock split in 2020 its stock had been trading at US$2,213 per share. After the split, each share traded at US$498.32, indicating an increase in response to the split.
The move doesn’t affect the company’s market value, which topped US$960b ahead of the shareholder meeting.
The gathering follows a recent rally in the stock price following a better than expected second-quarter earnings. Tesla generated US$2.3b billion in profit for the period, ahead of Wall Street’s expectations but below its record quarterly profit of US$3.3b earlier in the year.
During the meeting, investors also discussed some concerns shareholders have with Tesla’s corporate governance, including scrutiny from authorities over alleged racial discrimination.
But in the end shareholders voted in line with board recommendations on most issues at the company’s annual meeting on Thursday, reelecting directors, and rejecting a number of proposals focused on environment and governance.
Chief Executive Elon Musk spoke to investors, outlining his plans for expansion.
The company is aiming to hit a production run rate of two million vehicles per year by the end of 2022 and will continue building factories.
Tesla has factories in California and Shanghai and is ramping up two more in Austin, Texas and Berlin. Musk said Tesla might be able to announce an additional factory this year and he expected eventually to have 10-12 so-called gigafactories.