Is It Worth Investing in Tesla Before the Stock Splits?
Tesla announced in a tweet last week that it will ask shareholders to vote at this year’s annual meeting to authorize additional shares in order to enable a stock split. While a split would enable more investors to afford to invest in Tesla and broaden the company’s audience and reach, what does it mean for investors who want to buy the stock before the split?
Tesla would join the likes of Amazon and Alphabet, which announced 20-for-1 stock splits in March and February respectively, and also sent both of those stocks soaring at the time.
“On March 28, 2022, Tesla Inc. announced its plan to request stockholder approval at the upcoming 2022 Annual Meeting of Stockholders for an increase in the number of authorized shares of common stock through an amendment to the Company’s Amended and Restated Certificate of Incorporation in order to enable a stock split of the Company’s common stock in the form of a stock dividend. Tesla’s Board of Directors has approved the management proposal, but the stock dividend will be contingent on final Board approval,” according to a Securities and Exchange Commission (SEC) filing.
Charlene Rhinehart, CPA, and Motley Fool contributor, told GOBankingRates that although Tesla’s latest stock split intentions are stirring up a lot of excitement among investors, the move is only a cosmetic change and it won’t make your account any fatter.
“One share of stock will be split into bite-sized pieces so that more investors can purchase whole shares at a cheaper price. It’s better for investors to keep their eyes on the underlying business. Pay attention to metrics like revenue potential, production capabilities, and growth in vehicle deliveries if you want a shot at a long-term victory,” she said.
In an article, the Motley Fool recommends that if you feel that Tesla’s underlying business can continue a high-performance streak after analyzing the company’s financials and goals, you should consider adding it to your portfolio.
“You may or may not get to witness a stock split this year, but that shouldn’t be a deal-breaker for you. If the company continues to impress investors, Tesla could supply you with the portfolio gains you’ve been looking for, and that’s even more attractive than a stock split announcement,” according to the Motley Fool.
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