Tesla is planning to have another stock split this year. Tesla (TSLA) shares soared high after announcing the possible Tesla stock split at its annual meeting in 2022.
Tesla's filing at the Securities and Exchange Commission (SEC) and its recent tweet confirms the Tesla stock split. It is reported that in the coming Tesla annual meeting in 2022, Tesla will ask for shareholder approval to split the company's stock in order to pay a special dividend to shareholders.
Tesla will ask shareholders to vote at this year’s annual meeting to authorize additional shares in order to enable a stock split.
— Tesla (@Tesla) March 28, 2022
Tesla SEC filing states, "for an increase in the number of authorized shares of common stock ... in order to enable a stock split of the Company's common stock in the form of a stock dividend."
Tesla Stock Split
Tesla stock price increased by 8.03% during Monday closing; this makes Tesla stock price now at (NASDAQ: TSLA) $1,117.22.
Tesla's decision to seek shareholder approval for a stock split comes when the company is facing increasing competition from traditional automakers moving into the electrified vehicle market.
Stock splits do not significantly impact the value of a corporation. Stock splits are also a strategy to increase a company's stock liquidity. However, even though they lower the price that shareholders must pay in order to purchase a single share, they have the potential to increase demand and, consequently, the price.
Tesla's stock was split for the first time during the pandemic in August 2020. Since the 5-for-1 Tesla stock split went into effect on August 31, 2020, the company's stock has more than doubled in value.
According to CNBC, the Tesla stock has positively maintained an increase in each of the last five years. Tesla stock increased by 49.8 percent in 2021 and by 743.4 percent in 2020.
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Tesla's Growth in Market Value
Tesla must sell well more than 16 million electric vehicles per year, according to David Trainer, CEO of the investment firm New Construct, to justify its current Tesla stock price of more than $1,000 per share.
However, the company only sold approximately 1 million automobiles during the fiscal year 2021 and is nowhere near producing enough automobiles to justify that price level.
As mentioned by CNN, Tesla's manufacturing capacity still remains a fraction of the size of most long-established automakers despite having new Gigafactory in Texas and Berlin. However, the company has shown massive growth in market valuation as the car industry experiences a massive shift towards electric vehicles.
Tesla stock has increased by 1,884 % since the company turned around from a string of quarterly losses to an unexpected profit in October 2019. Tesla is now worth more than the combined market capitalization of the world's 13 largest automobile manufacturers.
Tesla just recently opened a new factory outside Berlin, Germany, the Tesla Gigafactory Berlin-Brandenburg. Tesla's CEO Elon Musk is striving to scale in extreme size to produce more electric vehicles for the company.
Tesla is opening more Gigafactory to meet the increasing demands of European customers. A previous report reveals that Tesla vehicles for European customers are shipped all the way from China to Europe due to scarce supply nearby. The company plans to employ 12,000 workers and produce 500,000 electric vehicles in Tesla Gigafactory Berlin-Brandenburg.
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