(Boursier.com) — The current stock market storm has caused Tesla’s stock to fall 34% since the start of the year, but that has not deterred its boss Elon Musk from carrying out a stock split, which had made the subject of a pre-announcement last March.
Friday evening, after the close of Wall Street, the American manufacturer of electric vehicles thus confirmed its intention to divide the par value of the security by three, without indicating the precise date of the operation. The measure will in any case be proposed to the vote of the shareholders during the Tesla’s next Annual General Meeting, scheduled for August 4.
While the Tesla stock ended at around $697 on Friday, it would be worth around $232.33 after dividing by three, knowing that the number of shares held by each investor will therefore be multiplied by 3. Since its inception, Tesla has proceeded to a single further division of its nominal value, by 5, in August 2020, when the price of a share had exceeded $2,200, making it inaccessible to small holders.
In its annual report filed with the American stock exchange authorities, Tesla also indicated that Larry Ellison, the co-founder of giant software companies Oraclewill not seek re-election as a member of Tesla’s board of directors at the next AGM.
“Our success depends on our ability to attract and retain excellent talent,” Tesla said, adding that “highly competitive” compensation packages with stock awards to each employee help the group be attractive. “We believe that a stock split haswould help to adjust the market price of our securities so that our employees have more flexibility in managing their securities”the group added.
Lower the amount of the entry ticket for small holders
Many technology companies listed on Wall Street have recently announced “splits”, operations which theoretically have no impact on the valuation of the group, but which in fact often result in a rise in prices. A more modest nominal value makes the value more accessible to investors, in particular to individual shareholders, by lowering the amount of the entry ticket.
Amazon was the latest to proceed with a split, with a division by 20 of the title, applied since last Monday, June 6. Last February, AlphabetGoogle’s parent company, announced a split equivalent to 20 to 1, which will take effect on July 15. GameStop also mentioned last March a plan to split its name, but did not detail the terms
As for Applethe apple firm has carried out 5 splits since its IPO in 1980, the last of which was carried out in August 2020 (division by 4).