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Tesla proposes a 3-way stock split to make its shares affordable

Tesla is pitching it as a method to “reset” its stock price

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Tesla plans a 3-way stock split to make its shares more affordable

Tesla is seeking shareholder approval for a 3-way stock split to make the company’s shares more affordable to buyers.

Tesla made the proposal in a list of items it plans to bring up at its August 4, 2022 shareholder meeting, which the company submitted to the US Securities and Exchange Commission on Friday. Tesla is pitching it as a method to “reset” its stock price, which has risen 43.5% since the company’s previous stock split in August 2020.

“While this value appreciation has led to our employees benefiting enormously through the years, we want to make sure all employees, no matter when they join, have access to the same advantages,” the company states.

The stock of the electric vehicle manufacturer finished Friday at $696.69 a share, down $22 from the previous day, for a total market value of more than $721.8 billion. However, at such high prices, it is impossible for people — particularly retail traders utilising platforms such as Robinhood — to hold more than fractional shares of the corporation.

If the stock split is implemented, Tesla stockholders will get two more shares of common stock on that day. As the value of stock tends to remain the same, institutional investors are largely neutral on stock splits. 

“We believe the Stock Split will help reset the market price of our common stock, giving our employees more flexibility in managing their equity,” Tesla explains. “In addition, we believe the Stock Split will make our common stock more accessible to our retail shareholders, as retail investors have expressed a high level of interest in investing in our stock.”

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