Tesla Climbs On Potential Stock Split: Here's How The EV Stock Performed After Previous Splits

Zinger Key Points
  • The previous stock split of Tesla shares led to the company being included in the S&P 500 Index.
  • Another stock split by Tesla could start the debate of the company being included in the Dow Jones Industrial Average.

Electric vehicle company Tesla could be splitting shares once again. The move would come less than two years after the company’s previous split. Here’s a look at how shares have performed since then. 

What Happened: Tesla Inc TSLA announced Monday that its baord approved a proposal to increase the number of authorized shares. The automaker announced that it will now seek shareholder approval for the same proposal.

“On March 28, 2022, Tesla Inc. announced its plan to request stockholder approval at the upcoming 2022 Annual Meeting of Stockholders for an increase in the number of authorized shares of common stock through an amendment to the Company’s Amended and Restated Certificate of Incorporation in order to enable a stock split of the Company’s common stock in the form of a stock dividend,” the company said in an 8-K filing.

The item will be voted on at the company’s annual shareholder meeting. No date has been set for the 2022 meeting.

The 2021 shareholder meeting took place in October 2021. The company’s annual meeting was in September in 2020. The meeting was previously held in the month of June for the years 2017, 2018 and 2019.

Related Link: Here's Why Tesla Shares Are Rising

Why It’s Important: Tesla last announced a stock split on Aug. 11, 2020. Tesla did the stock split previously to help make its shares more accessible to employees and investors.

The news of a 5-for-1 stock split sent shares up 5% after hours to the $1,454 level, or around $290.80 on an adjusted basis.

Tesla shares hit $498.32 on a split-adjusted basis on Aug. 31, 2020 when the split was conducted. Shares opened for trading at $502.14 on Sept. 1, 2020 after the split was completed.

Tesla shares are up 298% from the previous close before the stock split was announced. Shares are up 276% from the time of the split announcement when investors could first purchase shares based on the share split news.

Since completing the split on Aug. 30, 2020, Tesla shares are up 120%. This sharp increase came in 19 months' time.

While a stock split doesn’t increase the valuation of the company, it often leads to share rallies and potential catalysts down the road.

The previous stock split of Tesla shares led to the company being included in the S&P 500 Index.

Another stock split by Tesla could start the debate of the company being included in the Dow Jones Industrial Average.

Outside of the index inclusion, a stock split could also boost shares as they will look more affordable on a dollar basis to shareholders.

The rise of new stock brokers has led to fractional investing, but there is likely something more to owning a couple full shares of Tesla versus owning a fraction of a full share for smaller investors.

Another stock split from Tesla would also come at a time when other large companies are completing stock splits.

Alphabet Inc GOOG GOOGL announced a 20-for-1 stock split on Feb. 1, 2022.

Amazon.com Inc AMZN announced a 20-for-1 stock split on March 9, 2022.

Alphabet shares are down since the announcement and Amazon shares are up over 19% since the split announcement.

TSLA Price Action: Tesla shares are up 8% to $1,092, according to Benzinga Pro

Photo courtesy of Tesla. 

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