Tesla plans a 3-for-1 stock split to make shares “more accessible”

Tesla said Friday that it plans a 3-by-1 share split, in part to make its shares “more accessible” to retail investors. The announcement comes after the company’s shares lost 42% of their value this year.

Shares of the electric vehicle manufacturer rose 1.1% in the aftermarket, rising $ 7.31 to $ 704. The company on Friday announced the division of shares in a securities presentation.

Tesla shares have fallen this year amid economic pressures, such as the COVID-related shutdown in Shanghai, which limited production to a Tesla factory, as well as Twitter’s bid to acquire $ 44 billion. dollars from Elon Musk. This deal has put pressure on Tesla’s shares because Musk has taken advantage of its stakes in the EV company to fund the purchase of social media.

Stock divisions do not change the value of a company. For example, investors in a $ 100 share-based company that makes a 2-in-1 stock split will only have two shares worth $ 50 each; the value of its two new shares is the same as its previous single share. However, stock-splitting companies often outperform the market, according to Reuters, citing a Bank of America investigation.

This could be due to investors buying shares of a company after a split due to the perception that the shares are more affordable. Companies whose shares have risen to high prices, such as hundreds or thousands of dollars per share, often resort to stock divisions to make stocks more accessible to individual investors.

Tesla noted that its shares had skyrocketed since its last stock split in August 2020. Between that date and June 6, the company’s shares had risen 43.5%, point to the regulatory presentation.

“While this appreciation of value has greatly benefited our employees over the years, we want to make sure that all employees, regardless of when they join, have access to the same benefits,” she said. presentation.

He added: “Furthermore, as retail investors have expressed a high level of interest in investing in our shares, we believe that the division of shares will also make our common shares more accessible to our retail shareholders.”

The regulatory filing also said Oracle co-founder Larry Ellison will not run for re-election to its board.

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