Tesla is asking its shareholders to approve a triple stock split to make the company’s stock cheaper for buyers.
The request is included in a list of provisions Tesla plans to bring forward at its August 4, 2022 shareholders’ meeting, which it filed Friday with the U.S. Securities and Exchange Commission. Tesla sees it as a way to “reset” its stock price, which has risen dramatically in recent years — 43.5 percent since the company’s last stock split in August 2020.
“While this increase in value has meant that our employees have benefited greatly over the years, we want to ensure that all employees, regardless of when they join, have access to the same benefits,” the company states.
Shares of the electric car maker closed Friday at $696.69 a share, down 22 percent from the previous day and with a total market value of more than $721.8 billion. But at such high prices, it’s hard for individuals — especially retailers who use platforms like Robinhood — to own more than fractional shares of the company.
If the stock split takes effect, Tesla shareholders would receive two additional shares of common stock on that date. Institutional investors are largely neutral on stock splits, as the value of the stock generally stays the same.
“We believe the stock split would help reset the market price of our common stock so that our employees have more flexibility in managing their equity, all of which we believe can help maximize shareholder value,” Tesla said. . “In addition, as private investors have shown strong interest in investing in our stocks, we believe the stock split will also make our common stock more accessible to our private shareholders.”
Tesla also announced that Oracle co-founder Larry Ellison, who also helps fund Elon Musk’s Twitter takeover bid, will not be re-elected to Tesla’s board of directors. But Tesla has no intention of replacing him. Instead, the board will reduce the number of seats from eight to seven.