Shares of Tesla (NASDAQ:TSLA) stock are trading 5% lower today following shareholder approval of a 3-for-1 stock split. The split will bring the price of TSLA stock down to the $300 range and is meant to attract more retail investors to buy into the electric vehicle (EV) company at a lower price.
Tesla first announced its plans for a stock split last March. Furthermore, Tesla did not specify a date for split. However, The Future Fund Managing Partner Gary Black expects the company to file an 8-K form with further details today or on Monday.
Let’s get into the details.
Shareholders Vote to Approve TSLA Stock Split
Tesla last enacted a stock split during 2020, issuing five shares for every share held. From the day of the announcement to the actual split date, shares of TSLA stock surged higher by 60% according to Bloomberg.
A stock split does not change anything fundamentally about a company. Still, retail investors may be more inclined to buy whole shares at lower prices. Analyst Callie Cox explains:
“Owning the whole share can be less complicated and more empowering, and these companies know that […] There’s clearly an underlying desire in this market for any company to make its stock as accessible as possible. And so far, investors have responded to that.”
Tesla CEO Calls for Peak Inflation
At Tesla’s shareholder meeting, CEO Elon Musk also stated that he foresees a “relatively mild recession” for the next 18 months. However, the CEO also believes that inflation has peaked. Musk based his prediction on the commodity prices Tesla pays for raw materials. The executive added:
“We do get a fair bit of insight into where prices of things are going over time because when you’re making millions of cars, you have to purchase commodities many months in advance of when they’re needed.”
At the meeting, Musk also hinted at the possibility of a TSLA stock share buyback. However, the decision to enact this is still on the table.
By 2030, Musk expects to produce 20 million vehicles annually. Approximately 12 facilities will be needed to support this capacity, with each facility producing 1.5 million to 2 million vehicles per year. Musk added that Tesla recently produced its 3 millionth vehicle.
Finally, Tesla expects the Cybertruck to finally enter production during mid-2023. However, the EV will not carry the same specifications and pricing as the Cybertruck previewed in 2019.
On the date of publication, Eddie Pan did not hold (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.
