Tesla Announces 3-for-1 Stock Split, Upcoming Stockholder Vote

Mohit Oberoi, CFA - Author
By

Nov. 2 2021, Published 8:17 a.m. ET

In 2021, long-time Tesla bear Gordon Johnson of GLJ Research said that he expects the company to split its shares. Tesla has announced a 3-for-1 stock split, its second in two years. When will Tesla stock split?

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Tesla announced a 5-for-1 stock split in August 2020. The stock surged after the news and continued to rally that year. The stock rose 42 percent between the split date and the end of the year.

The 2020 stock split was the first in Tesla's history.

The 2020 split was the first in Tesla’s history and came after a splendid rally that started in November 2019. The company announced the split on August 11, 2020, after the close of markets. The stock closed around $1,374 on the day but rose over 13 percent the next day as markets gave a thumbs up to its split announcement.

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Tesla stock continued to rise between the split announcement date and the actual split, which became effective on August 31, 2020. The rally didn't stop there and Tesla stock continued to hit new record highs. Overall, the stock gained 740 percent in the year due to the year-end rally after President Joe Biden’s election win. Tesla's inclusion in the S&P 500 also helped the stock move higher.

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The rally in Tesla stock continued in 2021 and it gained 50 percent in the year. The Elon Musk-run company became the first automotive company ever to hit a market cap of $1 trillion. However, Tesla stock crashed in November 2021 after Musk said that he would sell Tesla shares.

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Will Tesla stock split again?

Tesla has filed for a 3-for-1 stock split. The shareholder meeting is scheduled for August 4 where the stockholders will vote on the split. However, given the rally after the previous stock split, it's almost certain that stockholders would approve the split. In general, stockholders have been supportive of stock splits.

Now, fundamentally, a stock split doesn't change anything as the earnings per share fall in proportion to the split. That said, it does help increase liquidity. Also, it makes the stock appear “cheap” and affordable to a lot of retail traders. Generally, it's seen that stocks go up on the split announcement.

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Which companies have split their shares in 2022?

Amazon and Alphabet have completed a 20-for-1 stock split in 2022. Both of these stocks were trading around $3,000, so a split made perfect sense for them. For Amazon, it was the fourth stock split in its history and the first one since 1999. That year, the e-commerce and cloud giant split its shares twice.

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As for Alphabet, it was the second stock split since 2014 and only the second split since it started trading. Alphabet structured the stock split in the “form of a one-time special stock dividend.”

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GameStop stock has also split.

GameStop has also completed a 4-for-1 stock split and will begin trading on a split-adjusted basis from July 22. GameStop's stock price is just above $150 before the split. The stock soared to almost $500 during the meme stock mania. As the meme stock mania subsided, meme stocks like AMC Entertainment and GameStop have also crashed. However, both of these stocks trade well above the price levels before Reddit traders jumped in to trigger the short squeeze rallies.

When will Tesla stock split?

Once Tesla stockholders approve the split, the company will announce the split date after which the stock would begin trading on a split-adjusted basis.

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