What Tesla’s stock split means for shareholders (2024)

If you thought Tesla shares at $864 were a good investment, how about shares at one third that price?

Of course, Tesla shares aren’t just magically getting cheaper—the 3-for-1 stock split was one of several moves approved at the company’s shareholder meeting on August 4. (You can read Fortune’s explainer on stock splits here.) This follows on Tesla’s first stock split in August of 2020–which was a 5-for-1 split. While stock splits don’t actually influence the value of the stock, they increase liquidity and Tesla’s split was overwhelmingly supported by shareholders.Despite the fact that stock splits are largely superficial, tech companies that have seen stock prices soar rely on them to make trading expensive shares accessible for retail investors. “I think Tesla wants to keep their share price lower to keep a single share more affordable for retail investors. This has likely been the driver behind both the 2020 split and upcoming split,” explained Morningstar senior equity analyst Seth Goldstein.

Tesla announced in a press release on August 5th that the split will go into effect later in the month. Tesla shareholders will receive a dividend of two additional shares of common stock that will be distributed after close of trading on August 24, 2022. Trading on the new stock split-adjusted price will begin on August 25th.

Interestingly, stock splits used to be far more common than they are today, with some analysts positing the the rise of fractional trading has made them somewhat unnecessary since via Robinhood or Schwab you can just buy a fraction of a Tesla share if you don’t have $800-plus dollars. As Fortune’s Anne Sraders previously reported, when a company splits its stock, “The cost per share is less, but the valuation has not changed, so it’s not cheap—meaning it doesn’t automatically become undervalued, it has the same value metrics that it did before,” CFRA’s Sam Stovall toldFortune. The upshot is that “it’s more psychological. People prefer to buy and sell an even number of shares, and they like to pay within a particular range if possible,” Stovall said.

Other Tesla shareholder proposals were voted down

Tesla investors erupted in enthusiastic cheer when high-profile CEO Elon Musk took the stage Thursday evening at their annual shareholders meeting, also known as the Cyber Roundup, at the Austin, Texas-based gigafactory. Yet the most significant decisions of the evening had largely been voted on preliminarily by the time Musk spoke at the event at about 6:15pm ET. Shareholders largely voted within the board’s recommendations, approving an anticipated stock split and overall rejecting investor proposals make moves to solidify more corporate responsibility for racism and sexism allegations Tesla has faced this past year.

This vote comes on the heels of Musk’s ongoing entanglement with his now rescinded offer to buy Twitter and a disappointing quarter for the company. Tesla’s stock is down 12% year to date.

Two Tesla board members, Ira Ehrenpreis and Kathleen Wilson-Thompson, were on the ballot this shareholder meeting and were re-elected. The Institutional Shareholder Services advised shareholders to vote against both of them because of the amount of borrowing Musk and other board members do as collateral of Tesla stock. The The ISS argued that pledging of company stock by directors poses a risk to outside shareholders.

Investors also considered on a range of shareholder proposals that Tesla encouraged them to vote against. Proposals focused on improving corporate governance, including shareholder propositions to require diversity reporting on the board of Tesla and mandatory disclosure of political lobbying did not pass. Other investor proposals not supported by Tesla’s board including allowing employees to form a union, requiring Tesla to report its progress in eliminating racial and sexual discrimination, and disclosing water risk all failed. These stockholder proposals follow Tesla’s removal from the S&P 500 ESG index in May. Tesla lost its place on the index, which lists companies that meet the bar of responsible environmental, social, and governance practices, largely due to racism allegations at Tesla’s gigafactories. In February 2022, the California Department of Fair Employment and Housing brought a lawsuit against Tesla for race discrimination and harassment at the company’s California factory.

An outside proposal that failed would have enabled shareholders who held 3% or more of Tesla’s stock for at least three years to have a say in director nominations. Despite the board’s discouragement, shareholders passed a proposal to increase investor’s power in nominating directors on the board. Shareholder proposals to allow board directors to serve two-year terms and to eliminate supermajority voting requirements did not pass.

As Musk interacted with the crowd like a true performer, he teased shareholders that he might be able to announce the location of a new gigafactory later this year. As audience members yelled out suggesting various states and countries, Musk responded jokingly. “Canada?” he said. “I’m half Canadian, so maybe.” Tesla currently has plants in California, Berlin, and Shanghai.

Musk said his goal is to produce 2 million vehicles annually and he reiterated his long term his vision for Tesla to produce fully self-driving cars. Morningstar’s Tesla’s analyst note projects Musk’s goals are within reach: “During the earnings call, management confirmed our view for the year that the Austin and Berlin factories were ramping up production, and it targets all factories to run at an annual production rate of over 2 million vehicles by the end of 2022. We think this is achievable, which would allow Tesla deliveries to reach roughly 1.5 million vehicles in 2022 and grow to over 2 million in 2023.”

Musk also argued that despite Tesla being competitive with other EV producers, all EVs take market share away from gas powered cars, noting that every huge car producer is now shifting to EVs. Musk also touted that Tesla passed the milestone of making its 3 millionth vehicle in the past week as shareholders in the crowd applauded.

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As a seasoned financial analyst with a deep understanding of the stock market and corporate strategies, I can provide valuable insights into the article about Tesla's recent stock split and the related shareholder meeting. My expertise is built on years of studying financial markets, analyzing company performances, and staying abreast of industry trends.

Firstly, the article discusses Tesla's decision to implement a 3-for-1 stock split, which follows a 5-for-1 split in August 2020. It's important to note that stock splits, in themselves, do not alter the fundamental value of the company. Instead, they increase liquidity and aim to make shares more accessible to retail investors. I concur with Morningstar senior equity analyst Seth Goldstein's observation that Tesla may be pursuing this strategy to keep its share price affordable for retail investors.

The article points out that Tesla shareholders will receive a dividend of two additional shares for each existing share, and the split-adjusted trading will commence on August 25, 2022. It's crucial to understand that the decision to split stocks can be strategic, aimed at influencing investor psychology and preferences. People often prefer trading even numbers of shares within a particular price range, and stock splits cater to these psychological factors rather than altering the company's intrinsic value.

Furthermore, the article touches upon the historical prevalence of stock splits and suggests that fractional trading platforms like Robinhood and Schwab may have diminished the necessity for splits. However, Tesla's move indicates a continued reliance on this strategy, emphasizing the company's commitment to retail investor accessibility.

The article also delves into the Tesla shareholder meeting, where several significant decisions were made. Despite Tesla's stock being down 12% year to date and the challenging quarter, shareholders showed enthusiasm for CEO Elon Musk's plans. The rejection of proposals related to corporate responsibility for racism and sexism allegations indicates a divergence in shareholder priorities.

Moreover, the article highlights the rejection of shareholder proposals focused on improving corporate governance, such as diversity reporting and disclosure of political lobbying. Tesla's removal from the S&P 500 ESG index in May due to racism allegations is mentioned, shedding light on the environmental, social, and governance practices influencing Tesla's standing.

In addition to the stock split and shareholder meeting, the article touches upon Musk's goals for Tesla, including the production of 2 million vehicles annually and the vision for fully self-driving cars. The mention of Tesla's expansion plans, Musk's interaction with shareholders about a new gigafactory, and the company's current production milestones provide a comprehensive overview of Tesla's current strategic direction.

In summary, Tesla's recent stock split and shareholder meeting decisions reflect a complex interplay of financial strategies, shareholder priorities, and the company's long-term vision. My in-depth knowledge of financial markets and corporate dynamics allows me to offer a nuanced analysis of these developments.

What Tesla’s stock split means for shareholders (2024)


What Tesla’s stock split means for shareholders? ›

Tesla has completed a 3-for-1 stock split, which saw investors receive two additional shares for each one they already owned when markets closed on August 17, 2022. The new shares were distributed after the closing bell on August 24 and Tesla began trading on a split-adjusted basis when markets opened on August 25.

How will Tesla return value to shareholders going forward? ›

Bullish Tesla investors also point out that the company's revenue growth beyond 2024 is expected to surpass all of the Magnificent Seven other than Nvidia Corp. Its earnings are also projected to bounce back in 2025 after dropping this year, and will be climbing at a faster pace than most other mega-caps.

How much Tesla stock will be after split? ›

Before Tesla split in 2020, the stock was trading in the range of $2,200. After the five-for-one exchange, the share price dipped down to about $440. In 2022, the three-for-one split shifted the price of TSLA from $900 down to $300. Today, TSLA trades around $200 per share.

What does 341 stock split mean? ›

A 3-for-1 stock split means that for every one share held by an investor, there will now be three. In other words, the number of outstanding shares in the market will triple.

What is the breakdown of Tesla shareholders? ›

Tesla (TSLA) Ownership Overview

The ownership structure of Tesla (TSLA) stock is a mix of institutional, retail and individual investors. Approximately 30.54% of the company's stock is owned by Institutional Investors, 13.66% is owned by Insiders and 55.80% is owned by Public Companies and Individual Investors.

How much will Tesla stock be worth in 2025? ›

Projections for the TSLA rate in 2025 vary significantly among analysts, with estimates ranging from a stock price above $300 to $3,000 per share. These projections are based on various factors and assumptions, including Tesla's market performance, EBITDA margins, and the broader electric vehicle market.

Is Tesla a buy or sell right now? ›

Gianarikas is relatively bullish on Tesla shares, rating them Buy with a price target of $234 a share, though he expects numbers will look weak. Wall Street is projecting operating profit margins of just under 7%, down from about 11% in the first quarter of 2023 and down from about 19% in the first quarter of 2022.

What will Tesla stock be worth in 2030? ›

He forecasts Tesla stock to gain about 550% to hit $1,200 a share by 2030, and for SpaceX to triple in valuation over the same period, according to a recent interview conducted by Bloomberg. Baron runs the Baron Focused Growth Fund, which counted Tesla and SpaceX as its largest holdings as of December 31, 2023.

What is Tesla's prediction for 2024? ›

We forecast that Tesla's deliveries will be roughly flat in 2024 versus 1.8 million in 2023. We anticipate lower average selling prices, as Tesla will likely have to cut prices in key markets like China, in line with peers. We forecast automotive gross margins will be 18% in 2024, in line with 2023 results.

What is the highest price Tesla stock has ever been? ›

Historical daily share price chart and data for Tesla since 2010 adjusted for splits and dividends. The latest closing stock price for Tesla as of April 23, 2024 is 144.68. The all-time high Tesla stock closing price was 409.97 on November 04, 2021.

Is it better to buy before or after a stock split? ›

Does it matter to buy before or after a stock split? If you buy a stock before it splits, you'll pay more per share than what it'll cost after it splits. If you're looking to buy into a stock at a cheaper price, you may want to wait until after the stock split.

Do stocks usually go up after a split? ›

A stock split doesn't change the value of your investment. If you own the stock of a company that executes a stock split, the details of your position change, but the total value of your position does not. Here are the key things to know about stock splits.

Is a share split good or bad? ›

Share splits, in general, are neither good nor bad. A stock split is takes place when companies want to make their stock look more attractive so investors can buy it.

Does Warren Buffett own Tesla stock? ›

Warren Buffett, the investing impresario and Berkshire Hathaway co-chairman, founder and CEO, rarely seems to make a bad move when it comes to investing. Yet Berkshire Hathaway passed on investing in Tesla, back in 2008, a move that Tesla's CEO, Elon Musk, is rubbing in Buffett's face today.

Who is Tesla's biggest shareholder? ›

His 13% stake makes him Tesla's biggest and most influential shareholder and he carries the full support of the board. Elon Musk says he isn't betting the company's future on Full-Self-Driving, but he argues that 'going balls to the wall for autonomy is a blindingly obvious move.'

Who owns the most TSLA? ›

Elon Musk is the largest individual Tesla shareholder, holding 715.022 million shares, representing 20.6 of Tesla ownership.

What are the predictions for Tesla stock? ›

TSLA Stock 12 Month Forecast

Based on 34 Wall Street analysts offering 12 month price targets for Tesla in the last 3 months. The average price target is $182.58 with a high forecast of $310.00 and a low forecast of $22.86. The average price target represents a 24.16% change from the last price of $147.05.

Is Tesla planning a buyback? ›

CEO Elon Musk mentioned in October 2022 that a $5 billion to $10 billion buyback for 2023 was discussed by the board. Tesla didn't repurchase shares last year.

Will Tesla pay dividends in the future? ›

Does it plan to? Tesla has never declared dividends on our common stock. We intend on retaining all future earnings to finance future growth and therefore, do not anticipate paying any cash dividends in the foreseeable future. When was Tesla's initial public offering (IPO)?


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