According to a new regulatory filing, Tesla (NASDAQ:TSLA) wants to enact a stock split soon in order to “pay a stock dividend to shareholders.” This news has shares of TSLA stock roaring today. Indeed, TSLA stock shot up more than 5% in pre-market trading today after it was announced that the electric vehicle (EV) innovator is preparing to split its stock for a second time. So, when is the Tesla stock split? And when it happens, what will it mean for a Tesla dividend?
The short answer is that there’s no specific date for the Tesla stock split. But there’s still plenty of information that investors need to know.
When Amazon (NASDAQ:AMZN) announced a stock split in early March 2021, investors wondered if Tesla would do the same. Less than one month later, the EV producer is seeking to do exactly that. While the Tesla stock split is not official yet, the company plans to put the measure to vote at the upcoming shareholder meeting. This morning, Tesla tweeted the announcement:
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
Investors have good reason to be excited. In 2020, the first Tesla stock split announcement sent shares up 80%. In the years since the 5-for-1 stock split, TSLA has more than doubled in price. If the next Tesla stock split produces similar results, it will be excellent for Tesla investors.
Stock splits often serve as a way to make shares more accessible to smaller investors. For large cap companies with shares that trade at consistently high levels, they often make sense. Splitting a stock can help set it on a new upward trajectory. Furthermore, a stock dividend refers to the additional company shares paid to investors as an alternative to cash. While they dilute share price, they don’t affect a company’s overall value.
Let’s take a closer look at what this latest news means for Tesla.
When Is the Tesla Stock Split?
As of now, there is no clear date for when the stock split will become official. Electrek reports that shareholder meetings are generally held in June. However, Tesla did not name a specific month or day in the 8K form filed with the U.S. Securities and Exchange Commission (SEC).
According to the filing, Tesla’s “definitive proxy statement relating to the Annual Meeting will include additional details regarding the Amendment, as well as the record date, date and location of the Annual Meeting.”
Although the company is waiting for the shareholder vote, Tesla’s board has approved the motion for the amount of authorized stock to be increased. That’s a good first step forward for securing the necessary approvals the company needs to move forward with the stock split.
What Will Happen to TSLA Stock?
Tesla splitting its stock again would only be good news for investors. As noted, the first Tesla stock split sent shares soaring. More recently, we’ve seen that type of price action from both Amazon and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) when the companies announced stock splits. While TSLA stock has struggled this year, it has been rising recently as multiple event announcements have created positive momentum.
This stock split is the next logical move for Tesla. It will lower share prices and make TSLA stock more accessible to new investors. There was already a strong case for Tesla to split its stock, and the company has realized it. Investors should watch closely for the shareholder vote.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
