Tesla Inc is about to get shareholder approval to increase the total number of its shares. This will help ensure a stock split on dividend payouts, a company spokesman said on Monday.
Tesla is going to issue an additional pool of shares
This proposal was previously approved by the board. Now the shareholders will vote for it at the annual meeting.
The current stock split will be the next after a 5:1 split in August 2020 that made Tesla shares cheaper for its employees and investors.
As a reminder, following the pandemic-driven rally in technology stocks, Alphabet Inc, Amazon.com Inc, and Apple Inc have also split their shares in the recent past to make them more affordable, so this move is welcomed by the markets. And Tesla's move has already generated both a wave of demand and a wave of resentment.
"This [stock split] could further inflate the bubble in Tesla stock that has been brewing for the past two years," said David Trainer, chief executive of research firm New Constructs.
Tesla delivers nearly a million electric vehicles annually, ramping up production with the opening of new plants in Austin and Berlin amid growing competition from legacy automakers and start-ups. True, the situation with the plant in Berlin remains controversial due to problems with water contracts, which, however, have recently moved towards a resolution of the situation.
"We think Berlin is gaining momentum, with MiniCar and India on the horizon, and we agree on the timing," said analyst Craig Irwin, hinting that companies usually do stock splits when good news is ahead.
Meanwhile, Tesla on Monday notified its suppliers and workers that its factory in Shanghai, China, would be closed for four days. The closure was forced as the financial center said it would be locked down in two phases to conduct mass testing for COVID-19.
The news managed to lift the stock quotes of the company by about 5%, also supporting the overall index of technology companies.
