U.S. electric vehicle manufacturer Tesla split the stock by 3 to 1. It is explained that it is to enhance shareholder value and compensate employees.
Tesla submitted a report to the U.S. Securities and Exchange Commission (SEC) on the 10th (local time) on the agenda for its annual shareholders’ meeting in August.
Tesla said, “The company’s success depends on attracting talent and a competitive (stock) compensation package, and this measure will also provide more flexibility for employees’ stock management.”
Stock split refers to splitting shares that have already been issued and distributing them according to the share ratio. Dividing stocks will make the market price cheaper than before, making it easier to trade. Tesla stock split is the first in nearly two years since its 5-1 split in August 2020.
Big Tech companies, which saw their stock prices rise significantly during the COVID-19 pandemic, are actively taking part in such face-to-face division. Amazon recently completed the 20:1 stock split, and Google parent company Alphabet will also split the stock at a 20:1 ratio next month. This is interpreted as a stepping stone for companies whose stock prices have risen sufficiently to increase corporate value by offering investors a more reasonable purchase price.
Tesla’s stock price rebounded 1% in after-hours trading after the announcement of the stock face-sharing plan, rising to the so-called “700-dollar-a-share.” Considering that the New York stock market closed at $696.69, down 3.12%, it is doing well.
Tesla’s stock price fell more than 40% from its peak in November last year. However, it rose 43.5% compared to the time of stock split two years ago. Tesla announced at this year’s shareholders’ meeting that Oracle founder Larry Ellison would step down as a board member, citing a proposal to shorten his term of director from three years to two. Tesla will hold an online shareholders’ meeting on August 4. Only a limited number of shareholders will attend the shareholders’ meeting in Austin, Texas.
