The summer of stock splits is just heating up. This week brought announcements from Gamestop (NYSE:GME) and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), but investors shouldn’t lose sight of what promises to be the most important split of the season. Tesla (NASDAQ:TSLA) shareholders are voting on the proposed stock split on Aug. 4. If they vote in its favor, it will mean a significant catalyst for TSLA stock.
Let’s take a closer look at the potential Tesla stock split and why TSLA is still a buy as it approaches.
Inside the Tesla Stock Split
Investors have plenty of reason to approach TSLA stock with caution. It is up 3% today, but has still shed more than 27% of its value over the past six months. Supply chain constraints and broad market forces have made it difficult for high-growth tech stocks to thrive, but there have also been plenty of negative Tesla-specific catalysts.
The company’s second-quarter deliveries fell by 18%, disappointing many experts. CEO Elon Musk has classified Tesla’s factories as “gigantic money furnaces,” and more recently placed the company’s Shanghai and Berlin plants on a two week pause.
However, investors shouldn’t be confused by the bearish chatter. The majority of analysts remain bullish on TSLA stock. As InvestorPlace writer William White reports, experts from Deutsche Bank, Wedbush and Oppenheimer still regard it as a buy. They know while Tesla has had a difficult year, it still has the potential to keep growing, especially with the pending stock split.
No one should have any doubts that the Tesla stock split will move forward. It is still contingent on shareholder approval, but investors have strong incentive to vote in its favor. They remember that TSLA stock surged 80% in the weeks leading up to the 2020 split through its finalization.
After a difficult year, investors want to see Tesla soar back back to its early 2022 highs. A stock split is a quick and easy path to a price per share of $1,000 at a time when Tesla has struggled significantly.
The Road Ahead for TSLA Stock
TSLA stock is still a buy ahead of the split. Granted, the proposal is for a 3-for-1 stock split, while the 2020 stock split was a 5-for-1. It may not yield gains of that magnitude, but it can absolutely trigger a trading frenzy as new investors rush to scoop up newly discounted TSLA shares. The company’s stock has plenty of potential to start rising, and when it does, investors who bought on the stock split dip will reap the benefits.
Tesla is already encouraging investors to vote in favor of the split. The company has made it clear that it feels the move is in the best interests of everyone, including shareholders. With history on its side, it’s hard to argue.
As InvestorPlace contributor Faizan Farooque recently noted, the stock has multiple growth levers that can propel it forward as market momentum shifts and bearish energy fades. The Tesla stock split is an opportunity for both new and current investors to profit.
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.
