New share split at Tesla in a ratio of 3 to 1 > teslamag.de

It has been known since the end of March that Tesla wants to split its shares once more. For no apparent reason, the company officially announced its plan to have shareholders vote at the next AGM to increase the number of Tesla shares to allow for another split. Initially, it remained unclear when the general meeting will take place and, above all, in what proportion the split should take place. Tesla submitted the appointment at the beginning of May and now also announced the second missing piece of information: Each share should become three.

Authorize 4 billion new Tesla shares

This can be found in the so-called proxy statement that Tesla made on Friday following the market closed published, i.e. basically the program for the Annual General Meeting. The number of authorized shares is to be increased by 4 billion to 6 billion, it says. The main reason for this is to allow a 1 to 3 split. To this end, Tesla is planning the form of a scrip dividend: two new shares will be added for each existing share.

As a result, the price per share usually goes down, but because everyone has more of it, nothing happened. On the contrary, stock splits are often accompanied by an increase in the overall value of a company. At the first Tesla split in August 2020, this effect was even extreme, and the share reacted to the new announcement at the end of March with a jump of 8 percent. The explanation suggested is that an optically low price attracts more investors. Alternatively, a split might be understood as a sign of optimism in management with regard to business and share price development.

Tesla itself justifies the preparation in its new document mainly with the desire to facilitate share purchases by its own employees. Unlike other companies, every permanent employee is offered the option of acquiring shares in it. The planned split should bring the course to a level that gives them more flexibility. In addition, private investors have also shown great interest in Tesla shares, and the division should also make them more accessible to them.

Price temporarily above $2000 before first split

After Tesla already named August 4th as the date for the annual general meeting at the beginning of May, it is now also clear what the split ratio should look like. At the current level, the price would then be around $230. At the first split in August 2020, each cost Tesla shares temporarily exceeded $2,000 before completion, which was then quintupled before temporarily rising above $1000 once more. It is now only unclear when Tesla will implement the next division. The fund manager Gary Black speculated that things would probably go quickly following the general meeting. Tesla no longer has to have the actual split approved.