Tesla (NASDAQ: TSLA) has announced that its Board of Directors has moved to execute a 3:1 split for the company’s common stock. The move will make the ownership of TSLA stock more available for both employees and investors alike.
On Friday, Tesla submitted a 14A filing with the SEC that clarified its plans for the 2022 Annual Stockholder’s Meeting, which will take place on August 4. Along with the several agenda items listed in the 14A filing, Tesla described its intentions to split its common stock by a 3:1 ratio, which will triple the number of available shares and split the price by one-third on the day the stock split takes place. This move does not affect the valuation of the company, it simply increases the number of common shares available of a publicly-traded company, while decreasing the price to make shares more affordable for investors.
“The primary purpose of the Authorized Shares Amendment is to facilitate a 3-for-1 split of our common stock in the form of a stock dividend (the “Stock Split”),” Tesla said in the filing. “As of June 6, 2022, we have 1,036,390,569 shares of common stock outstanding, and the current number of authorized shares of our common stock is 2,000,000,000, which is insufficient to effectuate the Stock Split. Our Board intends to approve the Stock Split, subject to and contingent upon stockholder approval of the Authorized Shares Amendment.”
Tesla declared a 5:1 stock split on August 11, 2020, which took effect on Monday, August 31. The price per share prior to the split was $2,213.40 per share. After, shares traded at $442.68.
Interestingly, Tesla also stated, as a part of Proposal Four for the Shareholder’s Meeting, that it would like to increase the number of authorized shares of common stock by 4,000,000,000. “Our certificate of incorporation currently authorizes us to issue 2,100,000,000 shares, consisting of 2,000,000,000 shares of Common Stock, par value $0.001 per share, and 100,000,000 shares of Preferred Stock, par value $0.001 per share,” the company wrote. “The Authorized Shares Amendment provides for an increase in the number of authorized shares of Tesla’s common stock from 2,000,000,000 shares to 6,000,000,000 shares. The Authorized Shares Amendment would not change the total number of authorized shares of Preferred Stock.”
“We are submitting to our stockholders a vote to adopt the inclusion of certain provisions in the proposed Amended Certificate to increase the number of authorized shares of common stock by 4,000,000,000 shares,” Tesla said.
Tesla said it believes a stock split “would help reset the market price of our common stock so that our employees will have more flexibility in managing their equity, all of which, in our view, may help maximize stockholder value. In addition, as retail investors have expressed a high level of interest in investing in our stock, we believe the Stock Split will also make our common stock more accessible to our retail shareholders.”
Tesla shares closed at $696.69 (appropriate for the company) on Friday.
Disclosure: Joey Klender is a TSLA Shareholder.
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