Tesla will ask shareholders to vote at this year’s annual meeting to authorize additional shares in order to enable a stock split, the company just announced in a tweet. The news sent the stock jumping 5.7% in pre-market trading on March 28. The stock is down 15.7% year-to-date.
“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.
Tesla would join the likes of Amazon and Alphabet, which announced a 20-for-1 stock split in March and February respectively, also sending both of those stocks soaring at the time.
A split would enable more investors to afford to invest in Tesla and it would broaden the company’s audience and reach.
“With the company’s last 5:1 stock split initiated in August 2020 and given the stock’s meteoric run, its 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,” Wedbush Securities Dan Ives told GOBankingRates. “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.”
Wedbush said it maintains its Outperform rating on the stock and $1,400 price target.
Barron’s reports that Tesla’s shares gained an incredible 80% from just before the 5-for-1 stock split announcement in August 2020 until the time the split became effective at the end of August. The run that pushed the stock up that much happened over about three weeks.
Tesla stock was roughly $500 a share when the 2020 split became effective. Shares closed at $1,010.64 on Friday. Another 5-for-1 split would put shares around $200. At that price, Tesla stock would even fit in the Dow Jones Industrial Average, Barron’s added.
In other Elon Musk-related news, the Tesla CEO and richest man on the planet says he’s thinking about launching a social media platform.
Musk responded to a Twitter user asking if he’d consider building a new social platform “that would consist an open source algorithm, one where free speech and adhering to free speech is given top priority, one where propaganda is very minimal. Musk replied, “Am giving serious thought to this.”
This follows Musk’s contentious relationship with the SEC regarding his tweets, which will to have to continue facing scrutiny, as GOBankingRates previously reported.
“So long as Musk and Tesla use Musk’s Twitter account to disclose information to investors, the SEC may legitimately investigate matters relating to Tesla’s disclosure controls and procedures, including Musk’s tweets about Tesla, as well as the accuracy of Tesla’s public statements about its controls and procedures,” the SEC said in a court filing earlier this month.
The SEC said it has a “legitimate purpose” in investigating whether Tesla has institutional controls over its corporate disclosures and if Musk is complying with them.
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