NEW YORK (AP) — Shares of Tesla jumped at the opening bell Monday after the electric car maker announced its second stock split in less than two years.
The company said in a regulatory filing, and also in a tweet, that it plans to make a request at an upcoming annual shareholders meeting to increase its number of authorized shares so that it can split the stock in the form of a dividend.
It did not say when a split would occur or the ratio of such a stock split, but it would follow similar maneuvers by a trio of tech companies that have seen their shares soar in recent months.
Tesla’s shares are up more than 60% over the past year, with each costing more than $1,000.
And the company is growing. CEO Elon Musk opened Tesla’s first European factory last week, a “ Gigafactory ” in Germany that will employ 12,000 people and produce 500,000 vehicles a year.
“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, said Dan Ives, who follows Tesla for Wedbush.
A stock split does would change the price-per-stock, but not the overall value of those holdings. It can push up the price of a company’s stock, at least temporarily, and the announcement did just that on Monday.
Shares continued to rise after the opening bell, almost 8%, or $77.22, to $1,087.86.
Tesla Inc. said that its board has greenlighted the proposal, but that the dividend is contingent on final board approval.
Tesla had a 5-for-1 stock split in August 2020, which went into effect one day after the company announced that it planned to sell up to $5 billion worth of its stock. Just three months later Tesla said that it was planning another stock sale, looking to raise up to $5 billion in that offering.
Tesla follows other tech giants that have seen the price of shares vault out of reach of most investors. Alphabet, Google’s parent company, announced a 20-for-1 split in February Amazon.com Inc. said this month that it would do a split of the same ratio.
“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,” Ives wrote in a research report.
In a filing with the Securities and Exchange Commission, Tesla said it would include more information, including the date and place of its annual shareholder meeting, in an upcoming proxy statement.
