Tesla shares jumped on Monday after the electric car maker announced its second stock split in less than two years.
The company said in a regulatory filing, as well as in a tweet, that it plans to ask at an upcoming annual meeting of shareholders to increase its number of authorized shares so that it can split the shares in the form of a dividend.
He did not say when a split would take place or the ratio of such a stock split, but he 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. Shares are up more than 60% in the past year. In January, the company posted record results for 2021, including a net profit of $5.5. billion. That was more than seven times its previous record for a profit of $721 million in 2020.
And the business is growing. CEO Elon Musk last week inaugurated Tesla’s first European factory, 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 no surprise that Musk & Co. is headed for another stock split, especially with strong demand for electric vehicles and the construction of Berlin’s flagship factories. and Austin Giga now on a glide path,” Dan said. Ives, who follows Tesla for Wedbush.
Ives, who forecasts Tesla shares to hit $1,400 in the next 12 months, said in a report that Tesla vehicle shipments are trending “well ahead” of Wall Street analysts’ projections. One hurdle for the company, as well as other automakers, that could temper its financial performance is an ongoing semiconductor shortage resulting from global supply disruptions.
A stock split would change the price per share, but not the overall value of those holdings. It can boost a company’s stock price, at least temporarily, and Monday’s announcement did just that.
Tesla said its board had given the green light to the proposal, but the dividend was subject to final board approval.
Tesla conducted a 5-for-1 stock split in August 2020, which took effect a day after the company announced it planned to sell up to $5 billion of its stock. Just three months later, Tesla said it was planning another stock sale, seeking to raise up to $5 billion in the offering.
Tesla follows other tech giants that have seen stock prices out of reach for most investors. Alphabet, Google’s parent company, announced a 20-to-1 split in February. Amazon.com Inc. said this month that it would proceed with an allocation of the same ratio.
“We view Tesla’s move after Amazon, Google, Apple and the launch of its second stock split in two years as a smart strategic move that will be a positive catalyst for stocks going forward,” Ives wrote in a statement. research report.
In a filing with the Securities and Exchange Commission, Tesla said it would include more information, including the date and location of its annual shareholder meeting, in an upcoming proxy statement.